In Manila’s upscale business district of Makati, luxury flats are still fetching record prices, but the country’s property barons are getting nervous as the financial crisis takes hold.

Builders have already started to review their plans amid fears that the huge Filipino expatriate work force that last year sent home more than US$ 14 billion, could shrink as jobs are lost in the recession-hit West.

‘We haven’t experienced changes in default rates,’ said Alfonso Reyes, chief investor relations officer for Ayala Land, the property firm that built Makati.

‘But given the uncertainty of the environment, it is understandable that there’s a bit of a wait-and-see attitude that is prevailing in some of the hard-hit markets in the US,’ he told AFP.

A third of Ayala Land’s residential sales last year were to Filipino expatriates, half of them based in the US. The figure excludes sales to locally-based relatives who may be receiving remittance money.

That figure has now dropped to 23 percent, Reyes said.

The SM Group, the country’s top shopping mall operator, still expects net profit to rise 13 percent to P14 billion (US$ 285.7 million) this year as consumer spending remains firm in the retail sector. But it has since announced it will trim its P4-billion budget for the middle-income condominium market for 2009.

‘Management feels that due to the global financial crisis, demand for housing may be dampened,’ said company spokeswoman Sarah Kae Llovido.

But experts say that some high-end developments may be recession-proof, thanks simply to their scarcity.

Luxury 300-square-meter high rise condo units in Makati, such as Discovery Primea with its private lifts, bedrooms the size of a helipad and Italian marble floors, and the nearby Raffles Residences project are among those residences that developers hope will hold their value no matter how tough the going gets.

Discovery units are still being snapped up at US$ 1.1 million each, and Raffles units are going for a record US$ 1.2 million each — three years before they are even built, Asuncion said.

Seen from Ayala Land’s Tower One headquarters, building activity in the Makati district has slowed, even though construction material costs have fallen substantially since the summer.

Ayala Land retail occupancy rates remain high and demand for the lower-priced segment of its residential market remains strong, said Reyes, adding: ‘We have not cancelled any project.’

But, he said, ‘We are aware of the changing conditions, and the risks in the market, so our posture is to be a little bit more flexible to be able to manage our risk exposure properly.’

Real estate companies that survived the 1997 Asian crisis found new growth in outsourcing, where Western companies cut costs by farming out accounting and other segments of their operations to lower-cost, English-speaking corners of the Third World.

The huge and increasingly affluent market of 8.5 million expatriate Filipino workers also came into play, bringing a boon to the housing as well as retail segments of the property sector.

‘The property sector may slow down, but there will still be year-on-year growth,’ said CB Richard Ellis research director Victor Asuncion.

Asuncion said Filipino builders have learned their lesson, and debt exposure is limited as developers sign office leases even before building them and sell homes off the plans — helped by a housing shortage estimated by the government at 3.7 million units.

Construction does not start until 40 percent have been sold or leased.