Published on Thursday, 05 September 2013 00:00
Malaya Business News Online -
Philippine Business News | Online News Philippines
The transfer of jurisdiction of Bonifacio Global City may have an impact on the continuity of business of companies in
the area, property experts said.
“The current operations of BGC have
enabled it to continuously attract occupiers and achieve values that are
comparable to Makati CBD (central business district). Ultimately, the
undisrupted flow of business operations will be the key to further investor
confidence in BGC,” said Sharon Saclolo, research manager at Jones Lang
Lasalle.
This was following a recent Court of Appeals decision transferring the
jursidction of BGC among other properties in Fort Bonifacio, to the city government of Makati from Taguig.
“Any potential change in jurisdiction
over BGC may initially cause some change in investors’ perception of the
district because part of the decision to locate there may be ascribed to its
current administration and overall management,” Saclolo said.
Saclolo said the current tax structure in BGC “is one of
the factors that contribute to the appeal of the district to locators.”
“Any changes in policies may affect the smooth
flow of operations, from the changes in reporting procedures, to the percentage
of applicable taxes. Disruption in
operations may affect the efficiency of locator firms in the performance of
their functions, so stakeholders in the district hope disruptions are minimized
and limited to the initial stages of transition, if and when it materializes,”
she said.
Colliers International, another
property consultancy firm, said some traditional office locators are not covered by special tax privilege like
those located in buildings declared as information technology zones which cater
to business process outsourcing companies.
Jie Espinosa, director for office
services of Colliers Philippines, said the surge in lease rates in BGC has
brought their levels that are “nearly equal” to the prevailing rates in the i
CBD. The slight disparity in rate is offset by the lower business tax imposed
by Taguig on businesses.
The differential comes to about to
about “50-60 percent.”
“Rent-wise, leasing rates between
Makati and BGC are nearly equal. With neglible difference, what makes the
difference is the tax,” said Espinosa.
Karlo Pobre, Colliers research analyst, said lease rates
for Grade A office space in BGC and Makati are
at P756 and P745 per square meter per month.
The past several years saw BGC
becoming a fast growing CBD, ranking second in terms of leasing rate next to
the 200-hectare of most prime CBD of Makati.
Makati CBD was the first-centrally
planned community and has been recognized as the prime business district in
Metro Manila for over 40 years that has remained the benchmark for property
prices and rents,” Saclolo said.
Among the major selling points of BGC
is its proximity to Makati CBD, which makes it a very accessible alternative
location, has a lower daytime population and more available land for future
development.
Saclolo said that the “weighted
cost-benefit trade-off between fees” is one of the “multiple factors”
considered by management in their decision.
“The onset of potential change in the
local government jurisdiction over the district may bring about management
uncertainty for occupiers,” she said.
“Current policies and practices in the
district may change but the degree of change and transition to this change may
be a matter of contention. Real-estate consultants may also have to review
their previous forecasts for this market,” she added.
Jones Lang Lasalle noted that BGC
started offering office developments in 2001 with a 40,000 sqm leasable space,
which has grown to approximately 600,000 sqm. at present.
“Future developments to be completed
by 2016 will contribute another 700,000 sqm.,” said Saclolo.
About 18,000 units of residential
developments were completed since 2000 with another 18,000 units to come on
stream in the next five years.
“Positive investor sentiment is
evident as prices and take-up rates of office and residential space have
reached levels comparable to Makati CBD,” Saclolo said.
“Land values have exhibited
accelerated growth rates over a short period, doubling in ten years mainly due
to heightened investor interest for office buildings buoyed by an increasing
number of offshoring and outsourcing
tenants. This movement in the office market also feeds demand for
residential, hotel and retail space in the area,” she added.
For the next two years, BGC will have
four more major retail projects to complement an existing four since 2004. It
is likewise set to house four new hotel ventures, in addition to the two
currently in operation.
BGC is part of a 700-hectare disputed
area which borders Makati City, Taguig City, Pasig City and the Municipality of
Pateros.
It is being developed by the joint
venture of Bases Conversion and Development Authority and the consortium
of Ayala Land Inc. and Campos-led
Evergreen Holdings , Fort Bonifacio
Development Corp.
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