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Higher interest rates not a concern for developers

November 22, 2018 News

HIGHER interest rates would not pose a concern to property developers amid strong demand from property buyers, according to an official of the European Chamber of Commerce. 

"When I got to talk to different developers, either the big players or individual developers, they actually do not worry about it. I don't think they are concerned at all," Sheila Lobien, ECCP Chairman of the committee of women in business, said at the Manila Times 8th Business Forum held at Mariott Hotel in Pasay City on Tuesday.

The Bangko Sentral ng Pilipinas (BSP) has hiked its rate for the fifth time since May, bringing the total adjustment to 175 basis points. 

This left overnight borrowing, lending and deposit rates at 4.75 percent, 5.25 percent and 4.25 percent respectively.

The BSP's move was in line with efforts to mitigate inflationary pressures.

"For them [property developers], as long as there is demand, if they invest in the real-estate market whether in office, retail or residential, if there will be takers... they're fine and they're able to do their numbers," Lobien said. 

At the same forum, she expressed optimism with the office market, whose total supply stands at 1.1 million square meters.

"The number of companies committing to build office space is increasing. We see a lot of Chinese companies taking chunks of space," Lobien said. 

The business process outsourcing or BPO industry is said to remain a key driver of the office market, and it is moving outside Metro Manila (National Capital Region or NCR) to Cebu, Cavite and Dumaguete City (Negros Oriental), among others. 

Lobien cited cheaper labor force, infrastructure, lack of office space and lower taxes outside NCR. 

She said the residential component remains healthy because of strong demand from Chinese buyers, particularly in the Manila Bay area, as well as from expatriates and overseas Filipino workers. 

"So far it's still healthy. Filipinos are more into house and lots," Lobien added.