PHILIPPINE REAL ESTATE and RELATED NEWS in and around the country . . .
.
.

Comm’l space lease rates at peak

[ Manila Bulletin Online ] April 18, 2008
By BERNIE CAHILES–MAGKILAT


The country’s commercial office space lease rates and demand have reached record highs of P1,200 per square meter and vacancy rate of merely one percent largely due to strong demand from the institutional investors who are here for the long haul, a property management company said.

Joey Radovan, vice chairman of property management firm CB Richard Ellis told a press conference that rental rates for Grade A office space in the Makati central business district (CBD) have gone up to P1,200 per square meter while the vacancy rate has been down to merely one percent from a high of 40 percent in 2000 to 2001.

"Makati is the main driver of supply and demand and pricing," Radovan said.

Radovan traced this to the continued influx of O & O operators into the country as well as the inflow of more tourist arrivals and the need for more tourist accommodation facilities plus the robust housing sector catering to the overseas Filipino workers (OFWs).

With the strong demand, more local developers are building commercial offices in the CBD in Makati, Taguig and Pasay. New property developers have been encouraged to venture into property projects thus the real estate growth is not only limited in Metro Manila but also in major cities and in the provinces.

This year alone, there are 732,595 square meters in new commercial office spaces of which 79,859 square meters have been pre-committed. In 2007, there were only 300,000 square meters of office space supply.

CBRE, however, said the record level of lease rates is expected to slowdown by end this year as new supplies come into the system.

CBRE chairman Rick Santos also noted that pre1997 there was also a boom in the property sector but the growth situation now is a lot different from that period where contracts were on for a short term period like three years.

"This time, however, we see institutional investment market coming in where lease contracts are good for 10 years or longer because it is value for money compared to other countries in the region that are five times more expensive than us," Santos said.

Fifteen years ago, Santos said, the assets being sold are those reposed assets but now these are institutional investments making the growth sustainable in the long run.

"We don’t see an idle building in Makati," Santos said.

With the economic recession in the U.S., property developers are also shifting their strategy by tapping overseas Filipino workers in the Middle East and Europe.

OFWs are estimated to account for 20 percent of total property and housing sales.

In addition, the government is building huge infrastructure projects across the country to sustain growth by way of massive infrastructure development.

The hard investments are for new roads, ports, power plants, water facilities and tollways and railways. Most of these projects are due for delivery by 2010.

As the Arroyo government works hard to attain a balance budget by 2010, sustain growth through infrastructure development continues with the help of the private sector.

The immediate beneficiary of this is the property industry given new land to develop given the new markets created, CBRE said.
_____________________________________________________________________

real estate central philippines
Copyright ©2008-2020