Real estate loans up 23% in 2013

MANILA, Philippines - Real estate loans extended by the local banking system went up in end-2013, reflecting the strong demand for office and residential properties in the country.

Bangko Sentral ng Pilipinas (BSP) data showed real estate loans went up 23 percent to P831.787 billion as of end-December from the same period in 2012.

This was driven by a 24 percent increase in commercial real estate borrowings to P511.337 billion and a 21 percent expansion to P320.45 billion in residential property loans.

The BSP also noted soured real estate loans amounted to only P23.377 billion of the total loan portfolio in end-2013. This was comprised of P9.473-billion worth of non-performing loans for residential real estate and P13.905-billion bad loans extended for office space.

The ratio of bad loans to the total real estate loan portfolio has improved to 2.81 percent last year from 3.66 percent in 2012.

Real estate loans accounted for only 18.16 percent of the banks’ total loan portfolio in 2013.

Strong demand for properties which has been driving real estate loans is seen to be sustained this year, global real estate services firm JLL has said.

JLL in March said the continued expansion of business process outsourcing (BPO) companies in the country will increase the demand for office spaces.

At the same time, the firm said higher incomes amid favorable macroeconomic fundamentals will allow young working individuals to purchase their own homes.

In August 2012, the central bank put in place stricter regulations in monitoring banks’ exposure to the real estate sector to ensure no asset bubbles arise in the sector.