It's Back to basics in 2009 to survive

Written by Rizal Raoul Reyes / Correspondent

Wednesday, 24 December 2008 18:01

EXPECTING the full impact of the global financial turmoil to be felt in 2009, the Philippine property sector must revisit the basic strategies deployed in the brick-and-mortar era to remain competitive, according to a major property consultant company. “It’s back to the basics for 2009, as the remaining liquid investors flock to traditional investment instruments, such as direct investments and ownership of real estate. The way to go is revisiting investment opportunities from brick-and-mortar businesses or companies which have a physical presence that offers face-to-face customer experiences,” said Rick Santos, chairman of CB Richard Ellis Philippines. For 2009, Santos said the stars for the Philippine property sector are tourism (both domestic and foreign), business-process outsourcing and the Filipino expatriates who continue to align to the demands of the global labor markets. “Investment into these real-estate segments will see the Philippine real-estate sector through this global financial crisis,” said Santos. In the recently concluded ULI Investor Forum held in Hong Kong, Santos said the Philippines can also depend on its talented human resources in case export revenues decline caused by the global economic recession. “The law of supply-and-demand tells us that the Philippines’ export sector is on the downturn because of the recession in the export market. The global financial crisis continues to agitate the major economies of the world. It began with the US, which has been experiencing a recession since December 2007. The ripple effect of this financial catastrophe has affected the economic growth of emerging economies such as the Philippines,” said Santos. From an outstanding gross domestic product growth of 7.3 percent in 2007, the National Economic and Development Authority (Neda) projects a lower-than-expected expansion within the vicinity of 4.5 percent. Santos said the expected economic slowdown in 2009 is not new for the Philippines and the rest of Asia. He said the “déjà vu” brings back recollections of the 1997 Asian financial crisis, remaining all too vivid for affected sectors of the economy such as banking, real estate and construction. Earlier, Santos noted how the wide portfolio of investments lured most equity funds to put money in high-risk and high-yielding assets and financial instruments such as mortgage-backed securities, credit derivatives and hedge funds. With the current situation, he said real estate remains a safe bet for investment. Just like the 1997 Asian crisis, Santos said the global financial crisis allows the correction of the values of properties to more realistic levels. “Most liquid investors are now presented with investment-grade properties at adjusted prices. Moreover, the Philippine real estate industry, as well as the banking industry, remains capable of developing projects through equity and loans,” he said.