Published on
Wednesday, 12 December 2012 23:00
Written by
ALBERT CASTRO
Malaya
Business News Online - Philippine Business News | Online News Philippines
Metro Manila
has become more attractive place for real estate investment, according to the
latest survey of real estate think tank United Land Institute.
Coming from a
18th place in the past ranking, the Philippine capital zoomed to 12th place in
this year’s Emerging Trends in Real Estate Asia Pacific 2013, its highest rank
since the survey was initiated seven years ago.
Metro
Manila’s status as a real estate investment and development destination in Asia
Pacific has improved on the back of robust economic expansion, improving
national government transparency and a strong outsourcing and offshoring
sector, according to a regional property survey.
The city’s performance
was buffered by the growing national economy, transparency and
business-friendly regulatory environment, and the country’s “on-going success
--- an ‘eye-opener’ --- in attracting foreign corporate clients to its business
process outsourcing (BPO) facilities.
“Bureaucracy
has declined and transparency has improved considerably over the past years
currently ‘the best market’,” said ULI citing an unnamed investor in its
report.
“As a result,
Manila’s appeal as an investments destination climed from the near bottom ofthe
rankings in previous years’ polls,” it added.
ULI also said
that of the 22 markets included in the report, Manila has ranked 9th for
development prospects, “a rapid rise from near the bottom of the rankings in
previous years’ polls.”
“A large
casino development underway in Manila has provided impetus to the development
sector and is expected to boost tourist arrivals as it is completed in phases
over coming years,” it also said.
ULI, however,
noted that though investment prospects is encouraging across all sectors in the
Philippines, “government regulations that bar foreigners from holding majority
landownership continue to deter international investment.”
“What is
more, local developers have little incentive to partner with foreigners, given
the availability of ample liquidity from domestic sources. Foreign
opportunities, therefore, are likely to remain restricted to the gaming and BPO
sectors. Admittedly, both present large opportunities, with the latter
currently accounting for some 70 percent of new office take-up in Manila,” it
said.
Manila
meanwhile ranked second in apartment residential prospects, fifth in retail
prospects, sixth in office prospects, eight in hotel prospects and ninth in
industrial and city development prospects.
ULI said that
the growing appeal of Manila “is part of a greater trend documented by the
report that shows investors turning to secondary markets and emerging cities
such as Manila in search of returns.”
“While steady
economic growth, rising incomes, and stable or increasing property values are
all contributing to positive real estate investor sentiment across Asia
Pacific, Emerging Trends notes that this outlook is tempered by concerns that
prime assets in key markets are becoming overpriced. For instance,
capitalization rates across Asia remain more compressed than in many western
markets, and yields for core office stock in cities such as Hong Kong, Beijing
and Singapore are returning as little as two percent,” it said.
“With high
rents, high capital values, low yields, and an abundance of local capital, many
international investors are struggling to see attractive investment
opportunities in Asia Pacific’s prime real estate markets,” meanwhile commented
ULI Trustee and ULI North Asia vice chairman Richard Price, Chief Executive,
Asia Pacific for CBRE Global Investors.
“As a result,
investors are expanding their horizons as they seek compelling investment
opportunities. Some are looking at frontier markets such as Indonesia, while
others are revisiting often overlooked capitals such as Kuala Lumpur and
Bangkok, which explains the strong showing for these locations in this year’s
report. Secondary markets such as Kowloon in Hong Kong and second-tier Chinese
cities are also experiencing increased interest from international buyers. At
the same time, core investment markets in many mature, western markets are
seeing a surge in demand from newly formed Asian Institutional Investors
seeking to capitalize on the post-global financial crisis corrections there,”
he added.
Judith Lopez,
chairman and senior partner at Isla Lipana & Co., Pricewaterhouse Coopers
(PwC) member firm, said “Manila is in the midst of a property boom.”
“It’s the
best that we’ve seen in decades—clearly a sign of the increasing confidence in
our economy. The gross domestic product (GDP) of the Philippines expanded 7.1
percent year-on-year in the third quarter of 2012, the fastest pace since 2010,
driven by higher household expenditures, construction and investments. This is
nearly the same pace as China and is even the best in Southeast Asia—it shows
the Philippines’ strong economic growth. The government’s transparency has
significantly improved, making the country more attractive to foreign
investors. The positive outlook in Manila’s real estate sector is mirrored by
the great opportunities presented by the business process outsourcing (BPO) and
gaming sectors over the next two years,” she said.
PwC is a
partner of ULI in the survey.
The attraction
of Manila can be gleaned in the volume of leasing according to Jones Lang
LaSalle.
David
Leechiu, Jones Lang LaSalle country Head, said that as of October, the firm has
tracked 413,000 sqm. of office leases, a 15 percent rise from 2011 so far.
“With several
more leases expected to close before the year ends, leasing activity has
exceeded our forecast. Further, we are seeing confident investment sentiment
not just in office development but also in the acquisition of property for
future development, whether it be for mixed use, commercial, residential,
hospitality, retail or industrial,” he said.
Jakarta
topped the 2013 rankings for both investment and development for the first
time, followed by Shanghai, Singapore, Sydney and Kuala Lumpur, to complete the
top five.
Emerging
Trends is based on the opinion of more than 400 internationally renowned real
estate professionals, including investors, developers, property company
representatives, lenders, brokers and consultants.
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