In its maiden investment in the Philippines, Malaysia's sovereign wealth fund Khazanah Nasional Berhad chose to put its money in 8990 Holdings, a listed mass housing developer whose company name was inspired by a Nokia cellphone model.
There is a lot going on for 8990 that could have played a part in Khazanah's decision to acquire 8 per cent of the developer in 2014 and be a cornerstone investor.
First, is the huge unmet housing demand in the Philippines, particularly in the low-cost segment.
The total housing need to ease the backlog – already at 5.9 million households in 2015 – is expected to reach 10.5 million households by 2030, with an additional 4.6 million houses needed from 2016 to 2030 alone, according to the Subdivision and Housing Developers Association. To eliminate the total backlog, an estimated 800,000 houses will need to be built annually until 2030.
“We see ourselves as a pure play in the Philippine affordable housing market. This is because unlike other developers we only cater to low to mid income earners, we do not sell homes that are priced higher than 2 million pesos (HK$300,989) and more than 90 per cent of our revenues come from the sale of our low cost residential developments,” says Wilibaldo Uy, 8990 Holdings president and CEO.
Then there's Manila's push to move development and progress outside the confines of the traditional urban centers of commerce, says Justino Calaycay, head of research and engagement at Philstocks Financial, Inc.
“The current backlog in housing (affordable segment) is expected to remain wide if not widen even more as long as plans remain on track. In particular (8990's) modular build system allows it to put up units in the least time, putting it at the frontlines of the supply ‘war', “says Calaycay.