Property sector bounces back

Strong property sales are often a precursor of economic recovery. The construction phase that follows such sales will lead to a demand for materials such as cement, iron, galvanized sheets, wood panels, nails and copper wirings.

The construction activity will directly create thousands of employment and open more job opportunities in the allied sectors through increased factory orders.

Ayala Land Inc., the country’s biggest real estate company, noted last week a recovery in the high-end property market as reflected by a resurgence in reservation sales from March to May this year. Prospective local buyers accounted for the bulk of the sales, filling up the slack of foreign buyers, especially migrant Filipino workers in the United States.

Ayala Land said a sister company catering to the high-end market reported sales growth of 52 percent in March, 7 percent in April and 52 percent in May. Early reservation sales in June indicate they will approximate the growth in May.

The sales figures are a turnaround from recent months when the global financial crisis and high inflation crimped the pockets of the high-end market.

“It was really the high-end market that was affected by the global financial crisis. … what we are seeing now is that high-end market is on the upswing. Over the last four months, we see positive trend in terms of sales for the high end segment,” says an Ayala Land executive.

The high-end market may not make a significant dent on the whole property sector but its behavior suggests that the middle- and high-income groups are now starting or ready to spend in the coming months. Their outlook on the economy has improved and their confidence to spend is being restored after withholding their purchases in the past.

Increased consumer spending through the creation of more jobs in the construction sector and more factory orders will drive the economy in the months ahead. It is up to the government to respond accordingly to this economic trend. A timely response will move the country farther from the brink of recession. –Manila Standard Today