Investors remain bullish on real estate sector
The Manila Times by Ritchie A. Horario, 11-20-2013
The sustained economic growth of the country is expected to
further buoy positive investor sentiment toward the real estate
sector, according to full-service real estate firm KMC MAG
Michael McCullough, KMC MAG Group managing director, said that
2013 has been a year of opportunities for the real estate sector,
owing to the consistently strong gross domestic product (GDP)
growth in the first half of the year. "The factors behind such
growth are the active construction industry and the business
process outsourcing [BPO] sector, as well as the high rate of
overseas Filipino workers' remittances," he said. He added that
credit-rating achievements have increased investment interests in
the Philippines, and a stable political climate under the
administration of President Benigno Aquino 3rd also contributed to
McCullough also pointed out that key interest rates are low,
offering good debt financing opportunities for real estate.
Moreover, increased commercial and residential real estate-related
loans signal an active property sector. "We've seen continuously
low vacancy rates, as there is strong take up within central
business districts [CBDs]," he said.
He explained that Makati continues to attract more institutional
investors due to relatively high yields at 8 percent to 10 percent,
and there has been an additional supply of 340,000 square meters of
space introduced this year, mainly in Bonifacio Global City in
Taguig. Increased purchasing power of the middle class has also
sustained the demand for subdivisions, townhouses and
According to him, the strong consumer spending has benefited the
retail sector, translating to an increase in gross floor area of
retail space in CBDs by 337,000 square meters this year.
"Manila remains the best value city to do business, largely
because of the relatively low real estate costs, and Makati remains
to be the location of choice for luxurious residential spaces,"
McCullough said. He pointed out that favorable economic conditions
and a highly skilled labor pool have attracted more international
BPO firms to come to the Philippines. "The increase in foreign
entry seen through the expanding BPO sector also drives the
residential market, especially for high-end apartments near the
CBDs," he added.
For his part, Melo Porciuncula, head of Capital Markets and
Investments of KMC Mag Group, noted that the Philippine market is
now prime for investment across all segments from development to
acquisition. "The office market offers institutional investors the
opportunities to increase cash flow and diversify portfolio. The
residential and commercial spaces, meanwhile, offer retail
investors viable alternatives for medium- to long-term investing,"
KMC Mag Group said that it is now an official international
associate of Savills, a leading global real estate advisor with
presence throughout the Americas, Europe, Asia-Pacific, Africa, and
the Middle East. "Our affiliation with Savills enables us to
capitalize on the opportunities in Southeast Asia and the
Philippines. Specifically, our capabilities in asset, property, and
facilities management, as well as services in the retail and
residential spaces will be strengthened as a result of this
partnership," McCullough said.