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Filipinos investing in their roots
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MANILA - The Philippines did away with imperial measurements more than 20 years ago, but these days Filipino real estate agents are learning again to describe property sizes in square feet rather than square meters.
It's just one of the many ways that Philippine property companies are adapting to the growing demand for second homes in Manila from affluent Filipino immigrants in the U.S., one of the few countries in the world still using a version of the British imperial measurement system.
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Having to shift from meters to feet is well worth the effort. Home purchases in Manila by Filipino Americans and other wealthy overseas Filipinos are helping fuel a property boom in the country's capital. Ayala Land, the country's largest property developer, now sells one-third of its high-rise residential units to overseas Filipinos, up from only 16% two years ago. In the first half of 2006, Ayala's residential sales - more than half its total revenue - soared 59% to $134 million from a year earlier.
More than 8 million Filipinos - one-tenth of the country's population - live and work overseas, with almost 1 million more leaving each year to chase opportunities abroad. Although most take low-paying jobs as construction workers, domestic helpers or ship workers, a growing number serve as health professionals. Their remittances reached $10.7 billion last year, making the Philippines the third-largest recipient of remittances after India and Mexico.
At least 60% of Ayala's sales to overseas Filipinos were made to Filipino-Americans. Many left the Philippines in the 1970s after President Ferdinand Marcos imposed martial law, said Dave Rafael, the head of Ayala Land 's international sales unit.
"While highly successful and already settled in the U.S., they still have strong links with the Philippines, where they want a second home to stay in for a few months each year," he said.
Rafael said soaring U.S. property prices have allowed homeowners there to borrow and finance homes in the Philippines.
Residential prices in Manila 's Makati central business district, where most of Ayala's residential towers are situated, have risen 7% this year after rising 5% last year, according to Colliers International.
The property consulting firm forecasts that home property values will rise 13% more by mid-2007, reaching levels not seen since 1997 and the heady days immediately before the Asian financial crisis. Rents are expected to rise 13.2% next year.
Higher demand for residential units has pushed down vacancy rates in condominium towers in the Makati district to 10.4% at the end of June from 14.6% last year, Colliers said
Home buying in Manila by Filipino-Americans and other overseas Filipinos extends the property boom in the office market to the high-end market for residential condominiums.
Office-space prices and rents began to rise in early 2004 as a result of demand from the growing number of call centers and business processing outsourcing facilities in Manila. The number of outsourcing workers has more than tripled to 162,000 last year from 1999 as companies take advantage of the large and cheap pool of English-speaking college graduates.
New and bigger outsourcing facilities in the Philippines are likely to halve office vacancy rates in the Makati district to 2.7% next year, said Richard Raymundo, research director at Colliers' Manila unit.
If the outsourcing workforce grows by at least 20% a year from 2006 to 2010, the industry will need an additional 658,000 square meters (7.1 million square feet) of office space during the five-year period, more than twice the room needed by the industry in the last six years, Raymundo said.
This article was written by Roel Landingin
Financial Times
October 30, 2006
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