Title: 2018 property forecast
Author: Amy R. Remo (Philippine Daily Inquirer) | Date updated: December 23, 2017
There is no doubt that the Philippine real estate industry can anticipate another stellar year in 2018.
But the factors that are expected to drive that promising growth will slightly differ compared to what has driven the industry in the past decade.
Such factors include a diversified office tenancy as well as the rising demand for flexible workspaces and warehousing, according to the latest report of Colliers International Philippines entitled, “Top 10 Predictions For 2018.”
Other factors that have and will help drive the strong performance for the property sector include a sustained GDP growth over the next three to five years.
“Perennial growth drivers such as household consumption remain robust while manufacturing and foreign investments’ combined contribution to aggregate economic output continues to expand,” Joey Roi Bondoc, manager for research at Colliers, said in a separate interview with the Inquirer:
“Overall, OFW (overseas Filipino worker) remittances and outsourcing revenues should sustain strong domestic demand, partly shield the Philippine economy from global economic shocks, and provide trickle-down benefits to key segments of the economy, including property,” Bondoc further explained.
Here meanwhile are the Top 10 predictions for the real estate industry according to Colliers.
1.Infrastructure-led GDP to buoy property
Much of the country’s growth will hinge on ramped-up infrastructure spending.
The ushering in of the “golden age of infrastructure” also lends support to the government’s decentralization push which should unlock land values in areas outside of Metro Manila and stimulate business activities in the countryside.
2.Metro Manila condominium leasing to remain challenging
Residential condominium leasing in Metro Manila remains challenging, driven by the influx of new condominium completions in major business districts and fringe locations.
Colliers expects developers to continue venturing into residential projects in second-tier and third-tier cities all over the country, where demand primarily comes from end-user buyers. The markets may be smaller compared to Manila but more stable in terms of end user housing demand.
3.Diversified office tenancy mix to be led by non-BPOs
Offshore gambling has filled the void left by business process outsourcing comapnies (BPOs). With the Philippine Amusement and Gaming Corp. (Pagcor) issuing 51 Philippine Offshore Gaming Operators (Pogo) licenses thus far, requirements from Pogos have sprung across Metro Manila.
We see less office launches next year following the decline in BPO companies’ office space demand. Colliers expects traditional companies taking on a bigger role in 2018 in terms of space absorption.
4.Flexible workspace to accelerate
There are over 2.15 million sq.ft. of (available) flexible office space in Metro Manila. The profile of tenants varies from start-ups, to law firms, Fortune 500 companies and freelancers.
As mobility, connectivity and flexibility become the norm in working in the 21st century, occupier demands will also change sharply, requiring more flexible office spaces over the near to medium term.
The challenge for the developers is to adapt to the demands of the market to remain competitive in this growing office segment especially as international co-working brands enter the market. Outside Metro Manila, growing hubs for flexible workspace are Iloilo, Bacolod, and Davao.
5.Growing popularity of e-commerce to drive warehousing, logistics demand
The warehousing and logistics market in Metro Manila is tight, operating at an average of 98 percent occupancy. Warehouses in the country’s capital have been dwindling as land values rise and demand for residential and commercial projects increase.
We see logistics and warehousing to be a major driver of Northern/Central Luzon economy over the medium term in light of the planned expansion of Clark airport and construction of Subic-Clark cargo railway.
Opportunities abound and are enticing developers to acquire warehousing and logistics businesses. Among the most aggressive are the SM Group and Davao-based businessman Dennis Uy of Udenna.
6.Industrial park developers head north of Luzon
Major developers are heading north of Manila. Recently, DoubleDragon acquired a 6.2-hectare lot in Luisita Industrial Park in Tarlac.
A proof of Northern and Central Luzon’s rising viability as an industrial hub is the Xu Liang Dragon Group’s commitment to develop a 3,000-ha mixed-use special economic zone in Pangasinan. Other industrial developments in Pampanga are Ayala’s 31-hectare industrial park in Alviera estate in Porac and Filinvest’s 100-hectare industrial estate in Clark Green City.
7.More townships outside Metro Manila
Colliers expects developers to continue pursuing satellite communities in and outside of Metro Manila. Townships offer a better value proposition (live-workplay-shop lifestyle) than standalone projects since they offer mixed-use developments.
We see developers pursuing more township projects in areas outside of Metro Manila such as Cavite, Laguna, Bulacan, Pampanga, Cebu, and Davao over the near to medium term as land values are being unlocked by an aggressive expansion of road networks.
8.More resort-oriented hotels across the country
We believe that the development of 3- and 4-star hotels in resort destinations will be more visible over the next two to three years. Colliers believes that among the most attractive locations for these developments are Cebu, Bacolod, Iloilo, Palawan, Davao, and Bohol.
New airport infrastructure is essential in further expanding both local and foreign tourism. Colliers believes that the expansion of international airports in major destinations such as Bohol, Bacolod, Iloilo, and Davao will allow foreign tourists to bypass Manila.
9.Continued growth of e-commerce and experiential retail
To attract more customers, we encourage malls to provide more lifestyle amenities and technology-driven customer experiences that generate a sense of destination.
Developers and retailers in the Philippines do not migrate totally to e-commerce but in fact use online shopping and social media platforms to complement their physical stores.
10.Leisure, industrial to drive Cebu property expansion
The completion of the Mactan-Cebu International Airport expansion project should further boost Cebu’s attractiveness as a tourist destination.
Cebu’s attractiveness as a tourist spot and growing competitiveness as an investment destination should support a 15 to 20 percent growth in tourist arrivals over the next 12 months. This should sustain hotel occupancy of between 65 percent and 70 percent across Metro Cebu over the next 12 months.
Demand for warehouses and container yard spaces may become more pronounced over the next 12 months.
We see industrial land values in the northern parts of Mandaue, Consolacion, and Lilo-an growing by at least a tenth annually over the next two to three years. Cebu remains as one of the most feasible industrial locations outside of Manila due to its strategic location and skilled manpower.
View full article HERE.
Title: Philippine property sector to grow further in 2018
Author: Rizal Raoul Reyes (Business Mirror) | Date updated: January 2, 2018
“Philippine real-estate market is sustaining its momentum with the country’s bullish economy, young demographics and consumption-driven market,” Santos Knight Frank (SKF) Chairman and CEO Rick Santos said in a recent news briefing held in Pasay City.
“Sound macroeconomic indicators continue to render the Philippines as one of the strongest performers among the emerging economies in Asia,” Santos added.
He also pointed out that the company remains bullish on long-term growth prospects for Manila’s real-estate market as the office, retail; residential and industrial sectors continue to expand
Manila’s office rental growth reached 4.3 percent year-on-year as vacancy rates remain at a very healthy level with 220,000 square meters (sq m) of additional office stock in the third quarter.
In the third quarter, Santos said more than 220,000 square meters of additional gross leasable area (GLA) has been added to the total office stock. Most of the new supply was already precommitted and taken up immediately. The total Prime and Grade A office supply has reached more than 4.5 million square meters.
Vacancy in Metro Manila increased to almost 5 percent in the third quarter of the year due to the large volume of additional stock introduced during the quarter.
Meanwhile, Santos said prices across residential segments have risen, with the luxury residential posting the highest at 28 percent year-on-year. More than 52,000 residential units are slated for turnover before the end of 2018. Office take-up or net absorption for the whole of 2017 is expected to reach above 600,000 sq m. He said that more than 3.7 million sq m of GLA is projected to be available in the next five years. Meanwhile, SKF expects a total of 946,782 square meters of leasable office space to be added to the current supply by 2018. Around 409,377 sq m, or about 76 percent of the total upcoming supply will be in the Bonifacio Global City (BGC). He said approvals of Philippine Economic Zone Authority projects are expected to increase following a more positive outlook in the information technology and business-process management industry in the coming periods.
Despite the global rise of e-commerce, the Philippine retail sector remains an attractive investment opportunity and is set to add 630,000 sq m in the next three years. That expansion is crucial for the industrial real-estate sector, where the need for warehousing and storage space continues to drive demand. Santos said there has strong investor activity in the residential sector buoyed by the demand for residences accessible to office, staycation and influx of tourists.
Sales of condominiums in Metro Manila was dominated by mid-end projects, which comprise about 64 percent of the total stock. This is followed by high-end, affordable and luxury projects with 24 percent, 10 percent and 2 percent, respectively.
SKF reported overall percentage sold in Metro Manila rose to 85 percent from 79 percent a year ago. Moreover, prices have increased across segments year-on-year and are now at P57,000 to P89,000 per meter for affordable (7-percent change); P78,000 to P176,000 per sq m for mid-end (6-percent change); P108,000 to P187,000 per sq m for high-end (4-percent change); and P182,000 to 350,000 per sq m for luxury (28-percent change). “A fast-growing metropolis, Metro Manila’s property market is leading vis-à-vis many other Asian cities. Manila today is Hong Kong or Singapore 30 years ago,” Santos pointed out.
“We’ve seen a vibrant real-estate market in 2017 driven by strong investment inflows into the country which triggers a positive ripple effect across all property sectors. We expect an even better market in 2018 as infrastructure projects go into full swing and create a more conducive business environment,” Santos said.
View full article HERE.
Title: Real Estate in the Philippines for 2018: An Industry Briefing
Author: Philip Omictin (A Medium Corporation)
In real estate, two key numbers dictate the overall business direction — interest rates and consumers’ income. This was the introductory message of Mr. Vince Abejo, senior vice president and cluster head of Filinvest Land Inc., as John Clements kicked off its Industry Briefing series last January 4, 2018 at the Executive Lounge of Antel Corporate Center in Valero, Makati.
“When interest rates go down, people are more inclined to borrow from banks to buy property, thus increasing real estate sales. When people have more income, they have more spending power to buy stuff and invest in things like real estate, among others.”
The real estate/property industry had been growing well for the last 15 years. The Bangko Sentral ng Pilipinas has done a good job in managing interest rates, while the Philippine economy has maintained a rapid GDP growth, which is now at 6.9 percent. The current administration’s Build, Build, Build program also contributed to the positive outlook of the industry — more roads mean easier access to real estate, which will benefit both developers and people looking to buy property. This positive growth is reflected by the fact that revenue from residential sales, as well as recurring revenues from malls, offices, and hotels experienced a double-digit growth year-on-year.
In terms of residential property launches, most developers are focusing their efforts on areas within Metro Manila, but outside of central business districts (CBDs). Nowadays, developers are trying to build communities — they don’t just provide residential areas, they also build offices, as well as entertainment and commercial centers around these residential properties to create an autonomous area where residents can live, work, and play without the need to travel far.
Mr. Abejo enumerated five Philippine Real Estate trends. These are:
- Economic and affordable segments drive the market — a lot of projects falling under these categories are at the fringes of Metro Manila.
- Filipinos desire for customizability — this remains to be one of the biggest challenges for property developers in the Philippines. Higher customizability translates to higher costs, especially with the introduction of new technology to drive customization.
- Design innovations anchored on Filipino lifestyle — this is already being done through the development of living communities mentioned earlier.
- Personalized service drives brand loyalty — another challenge for many developers, especially in after-sales service.
- Millennial market dealing with rapid urbanization — the challenge to create communities that will cater to the needs of this growing market, which will account for 70 percent of the workforce by the year 2030.
View full article HERE.
Title: Real estate soothsayers see ‘rosy’ picture in 2018
Author: Joel Lacsamana (Manila Standard) | Date published: December 21, 2017
Knight Frank Philippines chairman and CEO Rick Santos said the outlook on Metro Manila’s real estate market is more optimistic next year as the government’s infrastructure projects are expected to be rolled out, improving the business environment here.
He added that higher business confidence is seen as post-ASEAN hosting effect, since the government was able to project the opportunities in investing in the country.
Likewise, infrastructure funding deals and other key agreements forged by the government and officials from other countries who attended the ASEAN Summit are also expected to drive economic opportunities in the Philippines.
This will lead to stronger demand in property market, according to Santos.
“With deeper cooperation between the Philippines and East Asian neighbors such as China and Japan, prospects for the Philippines’ property sector are stronger than ever before. Enhanced infrastructure projects and access naturally attract more institutional and private investments that, in turn, lead to accelerated countryside development and growth of secondary cities,” he said.
The Philippines is now Asia’s new economic powerhouse on the back of its strong, stable macroeconomic fundamentals.
The country continues to have one of the fastest growing economies in the region, coupled with low inflation and interest rates, and strong remittances from overseas Filipino workers. Infrastructure spending is also on the rise, considered by many as a signal for sustained growth.
The Philippines’ investment grade ratings from notable credit rating agencies have long put the country on the radar of foreign investors, many of whom have started to set up shop here over the last several years. And with the strong investor confidence, more Filipinos today have stronger purchasing power given the access to better quality jobs.
The numbers tell the perfect story.
Metro Manila, for one, ranked third in terms of city investment prospects under the Asia Pacific City Investment Prospects 2017, which identified the Philippine region to be one of the “most attractive urban hubs for developers and yield-seeking real estate investors.”
Rental yields of residential condominiums in Manila also remained more attractive compared to the interest rates offered by other instruments, according to Colliers International Philippines. For instance, as of end February this year, Manila rental yields stood at 7 percent, higher than any of the rates offered by treasury bills and bonds, time deposit, and bank lending, Colliers said.
More importantly, data from Global Property Guide 2016 showed that the Philippines offers a higher gross residential rental yield compared to most countries in the region. At the same time, the country’s average residential prices remained competitive, way below those of Hong Kong, Japan, Singapore, India, Taiwan and Thailand.
What’s in store?
Industry observers believe the sectors which performed well in 2017 will likely see similarly growth in 2018.
Manalac said there a number of trends and growth drivers that the industry players should watch out for as these may offer highly lucrative opportunities for further growth and expansion of their respective businesses.
He said these trends included the expansion of mixed-use developments outside Metro Manila as these are expected to offer better value proposition than the stand-alone developments; as well as the development of meetings, incentives, conventions and exhibitions (MICE) and leisure facilities.
The year 2018 may further see the expansion of alternative industrial hubs; more strategic landbanking within the vicinity of crucial infrastructure projects ; and project differentiation, among others, added Santos.
Colliers Philippines predicts a surge in manufacturing investments and this will further raise demand for industrial space. Firms must start developing industrial parks outside of the Cavite-Laguna-Batangas area.
Public construction will be a major source of growth as the government committed to ramp up infrastructure spending.
Private construction will continuously grow due to sustained appetite for office and retail developments, while outsourcing and tourism-related activities will continue to drive the services sector.
“We anticipate the office, residential retail, and industrial sectors to grow further in terms of supply and activity, thanks to stronger regional trade and infrastructure cooperation,” he added.
For this year alone, office space take-up is expected to reach over 600,000 square meters, led by the demand in the information technology and business process outsourcing (ITBPO) sector.
For the residential sector, around 52,000 residential units are scheduled for turnover in 2018.
More than 182,300 square meters of retail space are slated for turnover by the end of the year.
The company noted that there is an increasing demand for warehouse and storage spaces, particularly in Metro Manila, Clabarzon (Cavite, Laguna, Batangas, Rizal and Quezon), and Central Visayas.
“Build, build, build”
Colliers Philippines believes the implementation of infrastructure projects nationwide should provide access to properties that could be redeveloped into mixed commercial, residential, hotel or leisure and industrial estates.
Expect developers to be more aggressive in pursuing projects outside of Metro Manila as access will be significantly enhanced.
Millennials dictate retail spending in the country
Filipino millennials have high disposable incomes and have overtaken the baby boomers in terms of demographic size.
They are very selective in terms of products and services that they patronize. They are heavy users of “shared economy” services such as Grab, Uber, and AirBnB, and drive demand for e-commerce sites like Lazada, Zalora, SSI Online.
Developers are buildings new malls with the millennials in mind. They are starting to offer a unique tenant mix and house retailers that specifically cater to millennials.
We see developers constructing more lifestyle-oriented malls rather than retail-centric ones to differentiate themselves especially with the emergence of online shopping.
Thriving condo living to drive demand for home furnishings, accessories
Demand for home furnishings and accessories is primarily driven by an expanding middle class with incomes buoyed by BPO sector and remittances from overseas Filipino workers.
Growing local demand lures foreign brands such as Crate & Barrel, H&M Home, Pottery Barn, West Elm to set up shops. IKEA is set to enter the Philippine market.
At the beginning of 2017, the projected supply of new office space was close to 900,000 sqm. This has been adjusted downwards by more than 30 percent due to project delays related to the tight labor supply in the construction sector.
Top general contractors are declining to provide their company profiles to prospective clients due to a shortage of adequately skilled workers.
Construction industry pundits believe that private construction in 2017 could’ve been more robust if not for construction delays brought about by the lack of adequately-skilled workers. The intensified development of public infrastructure projects around the country will exacerbate this problem.
Hotels and leisure segment on upswing
The emerging segment of affordable hotels is likely to drive the market given the rising number of local entrepreneurs and domestic tourists. Colliers sees local developers expanding their hotel portfolio to cater to this market.
Colliers projects hotel occupancy rates in Metro Manila stabilizing between 65 percent and 70 percent over the next 12 months.
Foreign arrivals are estimated to reach 6.5 million, and both affordable and luxury hotels stand to benefit. Unfortunately, the growth of tourism sector is still hampered by the capacity limitations of existing airports.
The entry of more foreign hotel brands such as Grand Hyatt, Okada, and Dusit’s D2 will continue in 2018. Tourism players anticipate the development of more resort hotels in tourism hubs in Visayas and Mindanao.
View full article HERE.
Title: Lamudi Reveals What’s Shaping Philippine Real Estate for 2018
Mixed-Used Complexes: A Stable Trend
The surge of all segments can be owed to the fact that most of the completed or recently launched developments are mixed-used projects that offer a complete lifestyle. Inclusive with all the necessities and ingredients for comfortable living such as areas to live, work, and play, mixed-used developments appeal to most investors and buyers. This is evident as a number of townships are strategically developed not only within Metro Manila but also to key areas around the country.
Megaworld Corp., one of the pioneers in township development, believes that through these “mini-cities” we can lessen our carbon footprint. “Imagine living in a walkable community where you don’t need fuel to get to work or do your shopping; we are not just making ourselves healthy but we are also saving the environment,” shared Jericho Go, Megaworld’s First Vice-President for Business Development and Leasing.
The City of Manila, on the other hand, looks bent on joining the land reclamation bandwagon with Solar City, a proposed development to rise soon on Manila Bay. In an article published in the Manila Times, “this 148-hectare project will be designed to be green, self-sustaining, and innovative…and it will be the first of its kind in using renewable energy from solar, wind, and biomass sources.”
Other mixed-use complexes soon to rise in other parts of Metro Manila include Arca South in Taguig, Quezon City’s Triangle Park, and Aseana City in Parañaque, among others.
Demand for Office Space Deemed to Increase
Apart from the emergence of mixed-used complexes, real estate’s good performance can also be attributed to investors’ positive sentiment. According to the second quarter report of Colliers International Philippines, the demand for business process outsourcing (BPO) offices remains high, with the offshore gaming industry particularly sustaining the market. For Metro Manila alone, net take-up of office spaces totaled 190,000 square meters in the second quarter of 2017. The Manila Bay Area and Fort Bonifacio are the top locations that posted strong demand, according to the report.
JLL, on the other hand, observed positive outlook for the office segment in their Philippine Property Market Monitor released in July of this year. The global real estate consulting firm also cited emerging provincial locations, which include Naga in Camarines Sur and Puerto Princesa in Palawan. Sitel recently inaugurated its first O&O hub in Puerto Princesa, which is expected to generate 1,000 jobs in the Palawan capital. Sitel also has sites in Baguio and Tarlac. Moreover, Robinsons Land recently launched Robinsons Cybergate Naga, its newest office development in the Bicol Region.
Affordable and Mid-income Residential Projects Takes Center Stage
Developments located in the fringe areas of major business districts are also sustaining the growth of the condo market, according to the Q2 2017 report of Colliers. Growing demand for affordable and mid-income projects has prompted property developers to expand outside the traditional business districts. This trend shows that while taking advantage of the convenience of being near to CBDs, homebuyers are likewise empowered to choose competitively priced developments. Furthermore, the availability of developable land and ongoing transport infrastructure projects make these areas more attractive.
View full article HERE.