Published on Thursday, 03 January 2013
00:00
Written by ALBERT CASTRO
Malaya
Business News Online - Philippine Business News | Online News Philippines
The property
industry can be assured of at least more
three years of vibrant activity,
experts said.
The office
market will continue to benefit from the global offshore and outsourcing
industry, while the residential and retail space markets would still be propped up by
improving private consumption.
Tourism also
gets a boost as the Philippines emerges as the next gaming hub in Southeast
Asia.
“It took 20
years to get the stars aligned, but now we’re looking at sustained growth and
success. We are now experiencing the best real estate market in the Philippines
in the last 20 years,” said Rick Santos, chairman of property consultancy firm
CB Richard Ellis.
Jones Lang
LaSalle Leechiu, another property consultancy firm, said the property market
will continue to grow as the economy also improves.
In the office
space segment, demand is seen to hit a record 430,000 square meters, driven
primarily by the business process outsourcing (BPO) business.
Sheila
Lobien, JLLL director for project leasing,
noted that between January and November, office space demand hit 425,000
sqm., 18 percent more than the annual average demand of 360,000 sqm. recorded
in 2011.
“Even before
preferred office buildings are completed, companies are committing to take up
space, indicating strong optimism and heightened business activity projected by
the leading real estate consultancy for 2013.
Pre-commitments are backed up by signed lease agreements between
parties, and advanced rent and security deposits are paid,” Lobien said.
Lobien said
the office space market continues to be a sellers’ market as pre-commitments more
than doubled in January to November 2012
compared to the same period in 2011.
The average
base rent in Grade A office spaces in Bonifacio Global City and the Makati
Central Business District has gone up 15
to 20 percent since 2010.
“In 11 months
of 2011, we recorded pre-commitments of 68,358 sqm. In 2012, the figure over
the same period shot up to 175,922 sqm,” said Lobien.
JLLL noted
that a number of companies have pre-committed to office spaces that would be
completed by 2014.
Up until
2015, office supply set to come online is estimated to hit 7.9 million sqm with
the current supply now at 6.2 million sqm. Vacancy rate across Metro Manila
business districts meanwhile stands at 5 percent, JLLL said.
The
consultancy firm also said that should the Philippines post a “stable fiscal
position and good credit standing by 2013/2014,” it expects “other demand
drivers to create an additional demand of roughly 100,000 to 200,000 sqm of
office space.
Phillip
Anonuevo, JLLL associate director for Markets, said traditional companies like
Coca Cola and Aboitiz Group are also creating demand for office space,
comprising nearly 25 percent of current demand in Metro Manila at 100,000 sqm.
Coca-cola and
Aboitiz are moving to their new corporate offices in Bonifacio Global City.
“For the
office market and retail, (vibrant activity is)
at least going to (continue) for
the next three years, though of course we can’t see beyond that,” said
Anonuevo.
Santos said the Philippines “is expecting democratization
in the housing sector -- from a nation of renters to owners—based on low
interest rates and financing schemes.”
Victor
Asuncion, CBRE head of research noted the continuous increase in housing loans
volume.
CBRE expects
developers to focus on the mid-income
residential market segment within the P45,000 to P80,000 per sqm price range.
The
Philippines has the lowest interest rates and best financing schemes for home
ownership today. Interest rates range from 5 percent to 11 percent for short-
or long-term payment schemes.
“This has
opened the opportunity for more Filipinos to become owners rather than
renters,” said Santos.
Both firms
meanwhile are bullish about the Philippines’ gaming prospects.
“The
Philippines is the Macau in leisure and gaming of Southeast Asia,” Santos said.
“In five
years, the Philippines will challenge Macau and Las Vegas in casino revenues,”
he added.
Anonuevo said
the government’s entertainment complex project in Paranaque City has provided
impetus for tourism development.
JLLL tracked
10,536 hotel rooms in the pipeline from 2011 to 2016. An additional 5,000 hotel
rooms has since been added to the figure in just six months.
“Investment
in the hotels and hospitality real estate asset class is experiencing record
growth. In addition, commercial properties such as Aseana One in the same
district have become an attractive destination for firms seeking to do business
in the proximity of the entertainment district,” he said.
The
encouraging prospects of the property market are driving an affiliated industry
towards optimism.
Philippine
Constructors Association (PCA) executive director Manolito Madrasto said that
in the same time frame of three years, the construction industry may see a
reverse migration of labor, imilar to what happened in neighboring Malaysia some five years back.
“So if we
keep up this growth, for the next three years, we will see a reverse migration.
It’s bound to happen. All because the government finally decided what needs to
be done,” said Madrasto.
Madrasto said
the market overseas for local contractors “would eventually dwindle” as a
result of the current global slowdown
which would erode the cost
competitiveness of wages in other countries.
“As the market hits a high, I foresee
that the industry will be forced to increase
compensation benefits, wherein if you consider the takehome (pay if you
work abroad), you would rather be here,” said Madrasto.
A study
conducted by BCI Economics said the construction industry would continue to grow.
BCI said that
the local construction industry is growing side by side with the economy.
BCI noted
that new construction projects are seen to grow by 264 percent in 2013 with new
building construction expected to grow by 145 percent.
For the first
three quarters of the year, concept and design projects amounted to P678
billion. Building construction work deferral rate and abandonment rate
meanwhile declined below 10 percent and 5 percent respectively, in the third
quarter.
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