The City of Taguig Real Estate
Board invited KMC Savills to deliver the 2018 Outlook during their
January General Membership Meeting.
Research Manager Fredrick Rara shared the
latest GDP growth of 6.6% YoY registered during the last quarter of the
year, making the Philippines one of the fastest growing
countries in Asia. This momentum will most likely be sustained by a
big government spending plan and PH's exemplary investment
portfolio. Based on recent data, it seems like Public-Private
Partnership is taking the sidelines as the government focuses on
full public spending.
He also addressed the issues
surrounding the newly-implemented Tax Reform for Acceleration and
Inclusion (TRAIN). He emphasized that it will "not be a big deal"
but it will most likely have a slightly adverse effect on the real
estate sector. The direct impact will be felt due to the lowered
estate taxes and VAT-exempt association dues and residential
However, Rara warned that
the said tax reform will also raise the excise taxes and that will
make it heavy for the consumers. This will also raise the prices of
coal and fuel affecting both construction and electricity costs.
Eventually, inflation is expected to jump significantly. To be
specific, he predicted that cement price will have a 5-10% hike in
price resulting to a 5-10% escalation in residential projects since
developers would retain their margins at 30 to 40% per project.
Rara also briefed the CTREB members on the
office market updates including a brief insight on the new
developments in the residential market. He made it very clear that
while the Business Process Outsourcing sector consistently ruled
the demand, the Philippine Offshore Gaming Operators (POGO) are
also establishing their big share on the office spaces in the
country. He pointed out that the Bay Area grew by 6% because it's a
hub for POGOs.
In terms of residential, he shared
that the take-up is "really good" with the luxury or high-end
market producing 5000 units per year. It is also possible that
rents will pick up at the same pace.
In conclusion, Rara stated that
the overall market outlook for 2018 is looking extremely bright.
The office sector will remain "bullish" but rent needs to be
properly mitigated to meet the current demand. However, TRAIN will
be inflationary, and the Central Bank will most likely raise the
prices of goods to keep it under control. The residential market
also needs to be more mindful of the country's 10-year bond given
that the yields are just starting to escalate.