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Newcomer Mitsubishi aims for lead in Philippine housing market

Venture with Century Properties targets middle-income homebuyers

Mitsubishi-built condominiums similar to these model homes have sold out in the Philippines.

TOKYO -- Japanese trading house Mitsubishi Corp. will partner with Century Properties, one of the Philippines' biggest developers, to build affordable, quality homes for the Southeast Asian country's fast-growing middle class.

Their new 1 billion peso ($19 million) joint venture will offer two-story condominium units and detached homes in the Manila suburbs, drawing on Mitsubishi's network of Japanese suppliers. The Tokyo-based group will hold a 40% stake, the maximum allowed for a foreign investor in the real estate sector.

Mitsubishi's overseas housing forays have mostly been limited to one-off projects. Then last year, Mitsubishi and Century Properties sold about 1,000 homes in the Philippines in just two months.

The performance was buoyed by the country's economic growth, which is creating steady jobs for a rising middle class. These factors encouraged Mitsubishi, Japan's second-largest trading house by revenue and biggest by profit, to make a long-term commitment.

Mitsubishi plans to take on three to five housing projects a year on the outskirts of Manila, aiming to sell 10,000 units annually within a decade, which would put it on par with the country's biggest developer. The Philippines allows between 200,000 and 300,000 homes to be built each year.

The venture will use concrete slabs instead of the usual blocks to build the houses' walls, reducing construction time by 20% while making them stronger and better able to shut out humidity. Other features may include insulated window sashes and glass that blocks ultraviolet rays. Mitsubishi will procure materials from Japanese housing supplies makers.

The homes will be priced in line with market rates, around the equivalent of $27,000 to $45,000.

With little prospect for growth in the shrinking domestic market, Mitsubishi and other Japan-based peers are searching for opportunities elsewhere in Asia, especially countries home to a burgeoning middle class.

Over the past five years, Mitsubishi was involved in nine projects in Southeast Asia that built about 15,000 homes in places like Indonesia and Vietnam. It seeks to become a long-term developer in more of the regions markets besides the Philippines.

Fellow trading house Sumitomo Corp. is taking part in a big mixed-used development in India with local conglomerate Krishna Group. Developer Tokyo Tatemono plans luxury high-rise condominiums in Bangkok.

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