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Mergers between local developers, international hospitality brands fuel real estate boom

By Louise Maureen Simeon (The Philippine Star) | Updated October 28, 2015 - 12:00am

MANILA, Philippines - The merging of international hospitality brands and Filipino property developers is contributing to the growth of hotel residences real estate market in the large part of the Southeast Asian (SEA) region.

A new research by Asia-based hospitality consulting group C9 Hotelworks showed SEA hotel residences market has topped the P749 billion level, while the Philippines alone has P158 billion worth of properties for sale.

“The historic pattern of hotel and real estate marriages has moved away from the beach and leisure destinations and is gaining traction in urban city offerings. Traditional lifestyle buyers are being supplanted by end users, with Asian’s representing the largest transaction segment,” C9 Hotelworks managing director Bill Barnett said.

C9 Hotelworks revealed that there are over 28,000 hotel branded residential units for sale across seven SEA nations represented by nearly 120 projects.

In the Philippines, market size is reflected in a supply of over 11,000 residential units with Metro Manila and Boracay as the top two locations. Average price for urban properties is at P196,547 per square meter (sqm) and P189,276 per sqm for resort destinations.

Barnett added that one key catalyst for the rising tide is the increasing number of mixed use projects that contain hotel and real estate components.

“What is clear in looking at the landscape is that rapidly escalating land prices are driving developers to embrace mixed-use projects in increasing numbers, and often add in commercial, sporting and tourism attractions as part of broader lifestyle offerings,” he said.

The report highlighted a refocus by global hotel chains who have realized that in order to spur growth, there is an essential need to partner with property developers in hotel residence offerings.

“Asia and the Philippine property cycles have typically seen these type of investment driven projects at the top of markets in the mid 1990s and again in the mid-millennium, hence history is recreating itself, yet this time out at a considerably higher scale,” Barnett said.

A growing number of new projects coming into the Philippines will include hotel brand alliances such as AppleOne Properties that will sign with global Starwood Group for a new Sheraton in Cebu.
Aside from the hotel component, the mixed-use development has 182 condominium units with one, two and three-bedroom types.

“It’s clear that a significant number of projects now contain both traditional accommodation elements and real estate components. It’s forecast that a large push into resort properties will occur in the next two to three years in the sector,” Barnett noted.
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