Security Bank arm bullish on property market

A unit of Security Bank Corp. is bullish about the prospects of the real estate sector as the country continues to emerge from the pandemic-induced recession.

SB Equities Inc. president Warren Sy said more Filipino households are now willing to buy houses as the Philippines continues to recover from the impact of the COVID-19 pandemic.

The country exited recession with a gross domestic product (GDP) growth of 5.6 percent last year, reversing the 9.6 percent contraction in 2020 as the economy stalled due to strict quarantine and lockdown protocols.

Economic managers are looking at a faster GDP expansion of seven to nine percent this year.

“The valuation of residential houses in the market suffered a decline due to lower demand, with buyers reducing their risk appetites. However, with the Philippine GDP poised to recover as we reopen our economy, household incomes are expected to increase — which could lead to families being more willing to buy a home,” Sy said.

The residential real estate market is poised for a rebound in 2022 after enduring headwinds from the pandemic-induced economic downturn.

The government’s infrastructure development plans are also expected to provide tailwinds to residential developers.

“Developing the infrastructure of provinces, especially with the aim of making them more accessible to Metro Manila, will stimulate economic growth and increase business competitiveness in these areas,” Sy added.

He cited prominent projects under the pipeline include the eight-kilometer NLEX-SLEX Connector Road and the Cavite-Laguna Expressway that would encourage more people to consider South Luzon as a place to live in.

Sy pointed out that Ovialand is one of the housing developers that would see a long-term uptick in consumer demand.

“Ovialand is a mass-market housing developer with a focus in South Luzon — particularly Quezon, Laguna, and Batangas,” Sy said.

According to Sy, Ovialand has ambitious growth plans for 2030, such as expanding nationwide and increasing its house building capacity to 6,000 house-and-lot units from the current figure of 900.

Ovialand is planning to raise P1.5 billion in an IPO, with China Bank Capital serving as the underwriter.

Pammy Olivares-Vital, the company’s president and CEO, said they will file IPO-related paperwork with the Securities and Exchange Commission by the end of March and have the listing by June.

“The funds that would be raised from the offering would provide much-needed capital for Ovialand to pursue its growth initiatives,” Sy noted.

While the company has not disclosed much information about its financial results, Sy said current publicly available information paints a bright picture for the company.

Ovialand’s revenues surged by 90 percent to P873 million in 2021 from P462 million in 2020.

The growth in sales happened despite the company raising prices by three to eight percent due to higher costs of raw materials.

 “This proves the resiliency of Ovialand’s customer base — people with monthly earnings of P50,000 to P100,000 — despite the ongoing economic recession,” Sy added.

Ovialand caters to the mass housing market with homes ranging from P2 million to P4 million.