Property prices in the Philippines have surged over the past few years, but it isn't clear puffed up valuations stack up to a bubble.
Flashing yellow lights abound.
Illya Heng, CEO of property developer D Prime, plans to build an around 760-unit project on 2 hectares of land on the island of Boracay. She's offering buyers 50 percent in-house financing, a move which can allow buyers to skirt any loan-to-value requirements banks might put on a mortgage, although she expects most will pay cash.
Heng, who said her project is seeing a lot of investor interest at pre-launch events, plans to offer mostly around 52-square-meter (560 square foot) furnished units at around 500,000 Singapore dollars ($400,000) -- slightly more expensive than many similarly sized units in nearby Singapore, one of the world's most expensive property markets.
Of course, Boracay offers a desirable location, named the world's best island by Travel + Leisure magazine in 2012. And Heng is quick to highlight that her units aren't going to be as utilitarian as many Singapore properties, claiming they will offer Santorini-style design, referring to the Greek island known for blue-capped, white-washed buildings.
But Santorini-style is cheaper in Santorini -- a 120 square meter (1,292 square feet) two-bedroom, two-bath maisonette with a sea view in Thira, Santorini was recently listed at 150,000 euros ($179,000).
However, Heng said she's only betting on property in Boracay, not the other more than 7,000 islands that make up the Philippines.
It isn't clear just how much property prices may have climbed throughout the country as pricing data are hard to come by. The central bank, Bangko Sentral ng Pilipinas (BSP), has delayed the launch of a property price index until sometime in 2015 from the first half of 2014.
Data from the Bank for International Settlements (BIS) show pricing of flats and commercial properties in the Makati area of the capital Manila has risen nearly 50 percent per square meter in peso terms from the first quarter of 2008, when the data set begins, through the third quarter of 2014. Land prices for Makati -- the only area that BIS has data for -- posted similar increases over the same period.
In the third quarter, land values in the Makati central business district (CBD) exceeded their 1997 pre-Asian Financial Crisis peak, according to data from real estate agent Colliers International, with CBD residential capital values up 3.4 percent from the previous quarter and around 5.6 percent on-year, while residential rents were largely stable on-quarter and up around 5 percent on-year.
The central bank has introduced some measures to curb property speculation, such as limiting the value of property that banks can use as collateral.
But overall, the BSP appears fairly sanguine.
"At this point in time, we don't see any clear evidence of an asset bubble in the economy," Amando Tetangco, governor of the BSP, told CNBC in December.
"We have required the banks to conduct stress tests on their real estate exposures," he said, adding that individual banks will be contacted as the "need dictates."
Others think whether there might be a problem depends on the location and the target customer.
Overall, "the market is very polarized," said Alexander Karolik Shlaen, an economist and CEO of Panache Management, a luxury brands and real estate investment advisor.
"[In the luxury segment], competition is so tough, they need to sell high-end stories," he said. For example, the Azure condominium in Paranaque city, southeast of the capital Manila, is offering a beach club house designed by Paris Hilton, while a Trump Tower is going up in Manila's Makati area.
"But if you go to the periphery, it's underbuilt," Shlaen added, saying he sees a lot of demand there, both for end-users and foreign investors. "There are not enough condos in the provinces, while Manila is saturated," he said.
Not everyone thinks Manila's condo market can be written off as overdone.
While the city's luxury properties can be priced on par with nearby Singapore, "it's not a development which embodies the whole Philippine property market," Jalil Rasheed, investment director at Invesco, said in an interview in December, noting a Philippine developer is one of the larger exposures in his fund.
Manila's condo boom has one key driver: traffic, Rasheed said. The congestion in Manila -- likely the world's most densely populated city-- is legendary, with a character in Dan Brown's novel "Inferno" calling the city "the gates of hell" in part because of the six-hour traffic jams.
With workers pouring into the growing business process outsourcing (BPO) industry in Makati, "people want to live closer [to work] in small units, 300-500 square feet. That's really booming because it's affordable," Rasheed said.
But some expect the market will face a significant slowdown.
"The best days for residential are likely over," Macquarie said in a note in December, citing rising condo inventory of almost two times annual sales and a high sales base after "unprecedented" project launches.
Tracts of land are also selling at record-high prices, likely denting future projects' profitability, it said, adding demand may also take a hit if developers try to pass costs on to buyers and renters.
But Macquarie isn't overly concerned yet, expecting residential sales growth to slow to 10 percent in 2014, from 2013's 13 percent and 2012's whopping 54 percent.
It expects residential price growth of 5 percent in 2015, similar to 2014. But while it's cautious on residential property stocks in the Philippines, it likes "recurring income" plays, expecting office and retail properties will do well.
Physical property investors still see opportunities. Panache's Shlaen, who is chairman of the judges for the Asean Property Awards, said he's eyeing a property in the city of Cagayan de Oro on the island Mindanao, which he believes is the first condo development there. The island's population is around 20 million, comparable with New York state, although its area is slightly smaller.
In addition to a seaport, many food processing companies have set up shop there, Shlaen noted. While the area is dependent on agriculture -- it's the Philippines largest pineapple producer -- industry is picking up and tourists are drawn to its label as the country's "white water rafting capital."
Unit sizes at the development are relatively small -- with three-bedroom units at around 65 square meters (700 square feet) -- to keep them at the entry level, he said. At the around $40,000 price tag for the unit he's considering, he would expect at least an 8-10 percent net yield.
"Locals bought like crazy," he noted.
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1