Philippine real-estate stocks will extend a market-beating rally, unfazed by the most expensive valuation in four years, Bloomberg reports, citing the country’s biggest money manager.
The Philippine Stock Exchange Property Index has climbed 24 percent this year as investors became more sanguine about President Rodrigo Duterte’s pivot to China and his U.S. counterpart’s insular approach to trade, which could hurt outsourcing companies. The measure now commands the highest premium since 2013 over the stock benchmark, which is up 17 percent.
Driving demand for houses and office space is an accelerating economy, rising remittances from Filipinos abroad and government incentives to draw offshore businesses. Complimenting that is lawmakers’ plan to lower some taxes and boost spending on roads and bridges, a move cheered by investors.
“Property stocks will continue to move higher and even outperform as the sector continues to grow with the economy,” said Fitzgerald Aclan, who helps manage about US$20 billion at BDO Unibank Inc. as the head of equity investments. “There are still some property companies that offer good value and attractive potential upside.”
The fund manager, whose BDO Sustainable Dividend Fund has gained 16 percent this year, pointed to Ayala Land Inc. Its shares have increased about a third in value in 2017 but are still trading at a price-to-earnings ratio that’s 14 percent lower than the five-year average. Aclan said he turned “bullish” on the sector this year, cutting holdings of consumer and energy companies to buy real-estate shares.
Perception has changed, according to COL Financial Group, amid an increase in home bookings and new residential developments, while the office segment is benefiting as the government lures overseas outsourcing companies and those that run gambling websites.
“It doesn’t look like this will be over anytime soon,” said Richard Laneda, an analyst at COL. “Sentiments have improved.”
“Property looks attractive but it pays not to be aggressive particularly when interest rates are inching higher,” del Castillo said.