Singapore's TPG Capital banks on PHL mass housing market, invests in 8990 Holdings

A large population that is still growing and an underserved need make the Philippine housing market make the Philippines an attractive place for long-term investments, a Singapore-based institutional fund said Wednesday.

 

The Philippines "stands out in Asia" because of its population and huge housing backlog that needs to be addressed, TPG Capital Pte. Ltd. principal Dominic Picone told GMA News Online.

 

TPG Capital placed some money in Philippine mass housing developer 8990 Holdings Inc. 

 

"Everyone talks about the great macro story of the Philippines, we believe that too. But when we get down to what's really driving it, that's where we want to invest in and that's why we go after the mass market," he said.

 

Picone noted the bulk of the population – the middle class and mass segment – is what drives consumer spending, particularly in housing.

 

"If you look at what's driving the economy, it's not the top three percent of the population. It's the bulk of the population and those are the people that are going to be buying the houses," he said.

 

Mass housing is an underserved market, and needs more investments in order to serve the backlog, Picone said.

 

"It's also a market that's underserved in terms of housing. So, the big name developers... they also serve the upper-end of the market, but the unmet demand is really exactly the market that 8990 is serving and that's what attracted us," he said.

 

Housing backlog

 

Colliers International Philippines data showed the housing backlog is estimated at 3.6 million.

 

TPG Capital was one of the two new investors who participated in 8990's P8.96-billion follow-on offering which concluded on Tuesday. The other was Khazanah Nasional Berhad.

 

8990 Holdings on Wednesday listed 1.24 billion common shares – 862.19 million primary shares and 382.36 million secondary shares – with an overallotment option of 134.95 million shares.

 

Net proceeds from the follow-on offering reached P5.4 billion, 8990 Holdings president and CEO Jesus Atencio said in a briefing after the listing.

 

TPG Capital's Picone noted that opportunities abound in the segment being served by 8990.

 

"With new money into the company... will allow them to buy more land and expand into new areas of the country," he said.

 

With the additional funds from the share sale, 8990 Holdings intends to double its landbank of 250 hectares by another 250 hectares.

 

"There's already a clear indication of this additional landbank... We expect to start closing deals this year," Atencio said.

 

The prospective landbank in the National Capital Region, Pampanga, Cebu, Iloilo, Davao, Bulacan and Cavite should be good for eight years, he said.

 

"The backlog today is 3.6 million, growing by 5 percent a year. By 2030, the backlog would have grown to more than 6 million in spite of all the units being produced by housing developers," he said. – VS, GMA News