PHL property sector at a sweet spot–real-estate firm
By Siegfrid O. Alegado, GMA News, 10-26-2013
Prime office space in Metro Manila will still see low vacancy
rates as firms, particularly those engaged business process
outsourcing, continue to flock the Philippines, officials of real
estate services firm KMC MAG Group Inc. said Friday.
At a briefing in Makati City, KMC MAG's managing director
Michael McCullough said the group sees "continously low vacancy
rates, as there is strong take up within Central Business
Districts." This, even as KMC MAG expects an additional 340,000
square meters of office space, most of which are in Bonifacio
Global City (BGC) in Taguig, McCullough said.
In its "Philippine REal Estate 2013 Midyear Report," KMC MAG
said vacancy rates in Makati were at 3.9 percent as of June, while
free office space in Ortigas andBGC were at 3.6 percent and 9.7
percent of the total stock. The higher vacancy rates in BGC was due
to new projects sprouting in the business district.
BGC "is becoming the most active business district, generating
almost 50 percent of the growth in the property market," the report
read. According to McCollough, the Philippines continues to
attract business for outsourcing and off-shoring given favorable
economic conditions and a skilled labor force, fueling not only
office but also residential and retail developments. Also, the
Filipino middle-class' rising spending power has sustained growth
in gated communities, townhouses and condominiums as well as retail
space. Rising numbers of expatriates in the metropolis also
drives demand in the high-end residential sector, McCollough
added.
In an interview after the briefing, Jose Carmelo Porciuncula,
head of capital markets and investments at KMG MAG, shared that
foreigners do not only buy high-end residences, particularly
condominiums, to live-in but also for investment purposes. "It
think it's the good news - strong growth, investment grade rating -
that is driving investments in the high-end sector," he
said.
The Philippine economy grew by 7.6 percent in the first half,
the fastest in Southeast Asia. This year, the three major global
debt watchers lifted the Philippines from junk
status. Porciuncula, however, did not raise flags over the
influx of foreigners buying real estate in the
Philippines. "There is still structural demand from Filipinos
who have rising incomes and expatriates. And there are restrictions
governing property ownership here," he said.
While the Philippine Constitution prohibits foreign ownership of
land, there is no restriction against foreigners buying condominium
units. Thus, foreign fund managers and retail investors buy luxury
units by top developers for investment purposes.