More Real Estate Investors Manila
Philippine Daily Inquirer By Raquel Gomez, 05-28-2014
MANILA now ranks as the fourth most preferred city for real
estate investors in the Asia Pacific, outperforming Singapore, Hong
Kong, and Sydney, according to property outlook report by real
estate services firm KMC MAG Group.
The report cites the Urban Land Institute's 2014 regional
findings on real estate trends.
Overall, KMC MAG Group reported the local real estate market
still continues to be robust across all property sectors. This
trend parallels that of the Philippines' economic growth.
The country's strong economic fundamentals have continued to
create a favorable investment climate, despite external shocks such
as natural disasters like Super Typhoon Haiyan and capital flows
returning to more developed economies, the report said.
The country's gross domestic product (GDP) grew by 7.2 percent
last year, and net foreign direct investments experienced a 36.6
percent year to date growth.
"The growth in the business process outsourcing sector, the
entrance of global players into the local economy, and strong
private consumption continue to make the Philippines' real estate
market one of the most attractive in Asia," said KMC MAG Group
Managing Director Michael McCullough. "With the country's
continued economic growth, low interest rates, and capital costs,
we expect the local real estate sector to continue performing
The current outsourcing trend in developed economies is expected
to bring in additional foreign investments to the Philippines.
Currently, the information technology business process
outsourcing (IT-BPO) industry is looking to create up to 124,000
jobs this year.
In the leasing market, KMC MAG Group noted the employment
generated by the IT-BPO sector will push annual take up to 400,000
Rental rate increase
However, there is only an additional 320,000 sqm of office
space available this year. This shortage is expected to translate
to an increase in rentals, with the growth driving current rental
prices to pre-financial crisis levels.
The growth in the IT-BPO sector will also remain to be a major
influence in the serviced office market, with at least three new
serviced office centers opening to keep up with the demand for
"We expect more IT-BPO companies to come in and invest in the
country, due to its young, educated, English-speaking labor
force, affordable labor costs, and taxation benefits for
investors," said McCullough. "The consistent growth in the IT-BPO
industry has driven demand to the extent that developers are
confident in building without pre-committed tenants."
Tourism, which is another potential high growth industry, is
driving investments in the hotel sector.
Meanwhile, strong private consumption, which accounts for nearly
70 percent of the country's GDI? continues to fuel the growth in
the residential and retail markets.
The growth in Filipinos' purchasing power has driven demand for
subdivisions, townhouses, and condominiums, and has also attracted
global retailers looking to gain a foothold in the country.
Increased purchasing power "Local developers have noticed the
increase in purchasing power, particularly among the middle class,
and are now responding to this growth by expanding their
portfolios and partnering with international investors for new
developments," added McCullough.
In Metro Manila, the three top business districts continue to
experience activity in both residential and office sectors.
Makati and Bonifacio Global City is still attracting
multinational corporations, IT-BPO companies, and entrepreneurs,
as well as the high end and luxury residential sector, with
Bonifacio Global City having the highest take up in 2013.
"In Makati, vacancy rate in the office sector is temporarily
high, but the demand created by shortage in prime office space can
absorb the vacancy," shares McCullough. "Meanwhile, in Bonifacio
Global City, the vacancy rate is expected to drop due to the
strong demand, despite the continued expansion in its
Ortigas is shaping up to be a potential BPO hub, given its
accessibility to labor from nearby areas such as Pasig, Quezon
City, San Juan, Taguig, and Marikina.
"Ortigas has the lowest vacancy rate among all of the business
districts; however, we expect this to change because of the new
supply," said McCullough. "Among the business districts in Metro
Manila, Ortigas also has the lowest average rate for Grade A office
space, which can make it an attractive location for IT-BPO
companies looking to invest in the Philippines."