Foreign investors remain positive over PH real-estate industry
By Matikas Santos, Inquirer.net, 11-05-2013
MANILA, Philippines-Foreign investors looking at the Philippine
real-estate industry see the benefits of coming into the country as
greater than the risks such as typhoons, earthquakes, and even the
"[Metro] Manila remains the best value city to do business,
largely because of the relatively low real estate costs, and Makati
[city] remains to be the location of choice for luxurious
residential spaces," head of real-estate firm KMC MAG Group
Managing Director Michael McCullough, said in a roundtable
discussion with reporters.
"The benefits outweigh the risks," he said when asked about the
country's annual share of at least 20 storms and the risk of
earthquakes hitting the metropolis because of the Philippines'
location on the Pacific Ring of Fire.
The Pacific Ring of Fire is a circular belt around the Pacific
Ocean where tectonic plates meet and a large number of volcanic
eruptions and earthquakes occur. In the Philippines, numerous fault
lines and volcanoes are scattered around the country.
One particular fault close to the metropolis, the West Valley
Fault, is expected to cause a magnitude 7.2-earthquake similar to
the recent quake in Bohol that destroyed centuries-old churches and
roads and bridges.
"It's something that the locators here are willing to accept
because of the fantastic labor supply. The quantity and quality of
the people that they need are here in the Philippines," McCullough
KMC MAG Group, which was established in 2009 and has had P2
billion in investment transactions, sees the stable political
climate, increasing remittances from Overseas Filipino Workers
(OFWs), and still growing Business Processing Outsourcing (BPO)
sector as factors that contribute to the optimism in the booming
The recent upgrade of the Philippines Credit Ratings has also
significantly improved the interest of investors in the country,
Melo Porciuncula, KMC MAG Group Head of Capital Markets and
Investments, said that Manila was one of the most affordable cities
compared to its neighboring cities in Southeast Asia.
"The thing with Manila, there's really great value, acquisition
wise [and] land values, they're one of the most affordable in the
region, that's the reason why [McCullough] was saying it's a great
place to invest in Manila," he said.
Asked about the problems of congestion in Manila which is among
the most densely populated cities in the world, Porciuncula said
that they see Manila is not yet "fully utilized" and that there was
still "room for growth and expansion."
"You can never discount the fact that it's a place of commerce
and people will always converge, thus the expansion of Sta. Rosa
[in Laguna] and Valenzuela. They're trying to find ways to make the
Central Business Districts still accessible and have the suburb
concept," he said.
"There are things that still need to be improved. We were hoping
for improvement in public transport system and infrastructure. We
have to remember that there are a lot of dense cities in the world
that do not experience these problems," Porciuncula said.
The government will need to look at the projects of neighboring
countries such as Hong Kong, Bangkok, and Singapore that dealt with
the same congestion issues Manila has, he pointed out.
"I think it's a matter of political will, we need a better
transport system, we need a better infrastructure program and
that's what will answer the challenges that are attached with a
dense city like Manila," Porciuncula added.
Big companies in the country have plans in the event of
disasters that would severely affect business, McCullough pointed
also said they have Business Continuity Process services for
their clients in the event of disasters.
But despite these contingency plans, he said that better urban
planning is definitely needed to make businesses work better.
Traffic, he said, cost around P2 billion in economic losses.
"We do need more urban planning, it's not just the cities that
need to urban plan, the whole of Metro Manila needs to come
together and work out some of these public transportation systems,"
"The traffic just going between Makati and Bonifacio Global City
is becoming almost ridiculous and it's just only two kilometers
away from each other and it takes you half an hour to 45 minutes
sometimes [to get there]," McCullough added.
The implementation and completion of airport and railway
projects also need to be done at a faster pace because of the
already congested international airport in Manila. He cited the
fast growth of Clark airport but noted that the lack of a
high-speed railway to connect it to the business districts made it
difficult to get there.
"We're clearly going to have to take the development outside of
the metropolis but we need the high-speed rails, we need that
massive infrastructure to make those areas developable," McCullough