Tuesday, July 22, 2008 [ manilatimes.net ]
By Darwin G. Amojelar, Reporter
PROPERTY research firms warned of a looming glut in the business process outsourcing (BPO) office space and condominium segments of the local industry.
In its first-quarter Philippine market overview, Colliers International Research said developable land values in the country’s central business districts (CBDs) will be flat next year owing to the oversupply of BPO office space and residential condominiums.
Colliers said it cut its forecast due to massive potential supply of BPO office space across Metro Manila and of residential condominium units in locations such as Fort Bonifacio where capital appreciation and rents may be subdued.
The consulting firm said rents and prices appear to be reaching their peak.
“Although we have seen more transactions in the past six months, we have revised our forecasts as we think valuations are starting to get steep and capital values for certain sectors could hit a plateau,” it said.
Separately, Joey Radovan, CB Richard Ellis Global Corporate Services head agreed with the Colliers assessment.
“There’s a lot of supply. Definitely it will affect the rentals and capital values of office space,” he said.
For this year, Colliers expects land values to appreciate by 5 percent to an average P304,500 per square meter in the Makati CBD and P136,500 per square meter in the Ortigas CBD.
At end-March, developable land in the CBDs is estimated at an average of P292,500 per square meter, or up by less than a percent in the past three months.
Colliers said residential prices appreciated by less than 2 percent in the first three months to an average of P96,575 per square meter. “Expectations are for prices to further rise by 8 percent for the remainder of 2008 to an average of P104,500 per square meter with an upper limit of nearly P116,000 per square meter,” the research firm said.
In terms of retail space, Colliers said the stock in Metro Manila was steady at 4.6 million square meters in the first quarter of the year and is forecast to increase by 3 percent in the first quarter of next year.
In the same period this year, Manila-wide retail vacancy stood at 14.1 percent, a slight improvement from the 14.7 percent in the last quarter of last year.
“The lack of any major new supply in the next 12 months should further lower retail vacancy to 11.1 percent,” Colliers said.
The research firm said rents in Ayala Center have declined to P1,197 per square meter per month during the first quarter from P1,225 per square meter in the fourth quarter of 2007. Year-on-year rental growth stood at 2.3 percent.
“Our forecast for 2009 is a 4.4-percent escalation to P1,250 per square meter per month,” Colliers said.
In Ortigas, rents went down by 2 percent during the year to P986 per square meter per month. In the next 12 months, Colliers said expectations are for rents to escalate by 4.1 percent to P1,026 per square meter per month.