Monday, December 01, 2008 [ manilatimes.net ]
By Darwin G. Amojelar, Reporter
PROPERTY values in the Philippines will fall over the next 12 months amid the current global financial crisis, Colliers International Research said.
In its latest Philippine market overview, the property research firm said land values in the traditional business districts have peaked in the third quarter at an average of P297,300 per square meter in the Makati Central Business District (CBD) and P132,900 in the Ortigas Center.
Given the current economic uncertainty and supply build-up in both the office and residential markets, appreciation from current levels is not expected over the next 12 months, Colliers said.
“Property values have started to correct particularly in the office segment with the presence of considerable office space available in alternative locations. This trend is expected to continue in the next 12 months with investors also taking a cue from troubled financial markets that currently affect the country’s macroeconomic performance,” the research firm said.
Philippine economic managers recently revised the country’s gross domestic product (GDP) growth forecast to between 4.1 percent and 4.8 percent this year and 3.7 percent to 4.7 percent next year.
Despite the economic uncertainty, Colliers however noted that demand from both new entrants and expansion in the business process outsourcing (BPO) sector appears to be holding up.
“Several market commentators have suggested the rationale for off-shoring and out-sourcing can only be strengthened as corporate profits come under pressure in developed economies now facing recession and there is a strong logic to this argument,” the research firm said.
Decision-making however, will slow with some expansion planned for the fourth quarter already deferred until the first half of next year, it said.
At end-September, vacancy in the Makati CBD stood at 2.4 percent, a marginal fall over the prior three-month period. Vacancy in Premium and Grade A buildings eased as tenants relocated to lower cost locations or buildings.
The research firm said this trend would accelerate over the next six months with significant relocations planned from Makati’s best buildings. Office rentals in Makati are also expected to go down, as accommodation options are available in secondary and suburban locations, Colliers said.
“As economic growth slows, weaker expansion demand is anticipated from traditional [non-BPO] CBD office space users. Across Metro Manila, rents are anticipated to tend downwards at 3 percent to 5 percent per quarter through to the second half of 2009,” the research firm said.
For malls, average retail rents will increase slightly by the end of this year, it said.
In Ayala Center, the average retail rents are almost steady at P1,230 per square meter per month and expected to increase to an average of P1,235 by the end of this year, as the peak season for retail arrives.
Ortigas Center retail rental rates are up by one percent to P996 per square meter per month compared with P986 during the second quarter.
Retail vacancy stood at 13 percent at end-September, a slight increase from the second quarter’s 12.7 percent.
“Vacancy should remain in these levels despite additional space to be added by the end of the year because of expected heightened demand in December,” Colliers said.