Property Sector Poised to Move

I have been bullish on the property sector since 1Q06 and I still believe that for the market to move higher, it has to be driven by property stocks. There are several events in the past 3 weeks that signifies that money is indeed flowing into the sector:

1.) Empire East (ELI - P0.69) initiated a P1.0bn stock buy back program. The move suggests that property companies are in the "positive phase" of its investment cycle. Instead of borrowing, they are in the position to give back their surplus capital to its shareholders. What we are seeing right now is that most property projects are self funding, thus giving real estate companies a lot of muscle to initiate new projects at minimal start-up cost.

2.) The average value turnover of Ayala Land (ALI - P11.75) in the past 3 weeks reached P150m per day. Last Friday, some P550m worth Ayala Land was traded in the market. This is roughly 30% of total value turnover of the market. Ayala Land is the proxy for the property sector. This means that foreign funds are buying into the sector.

3.) Megaword (MEG - P1.52) successfully launched its US$ 100.0m offering. We expect to see further activities in the sector.

Finally, the property sector is an indirect play into the OFW market. In 2005, OFWs remitted some US$ 14.0bn into the country. A lot of these monies have found its ways into the property sector. Most property companies generate 50% of their sales from OFWs.

Please check my past posts of the sector:

http://bigbigtrade.blogspot.com/2006_03_01_bigbigtrade_archive.html