2014 Midyear Media Roundtable Discussion: Highlights

KMC MAG Group held its annual midyear media roundtable discussion last Aug. 28, 2014 at the Makati Shangri-La hotel, Manila. The event was attended by some of the major media outlets in the country, including the Philippine Daily Inquirer, BusinessMirror, BusinessWorld, etc.

KMC MAG Group's Midyear Report showed a hopeful outlook for the Philippine economy, with an expected growth that may fall between 6% and 7% in spite of the Typhoon Haiyan aftermath. The company also noted the administration's efforts to clean up the system and to make reforms as among the key factors that help drive in more investments into the country. These help establish a more active and stable real estate sector, which accounts for about USD 57 million out of the country's USD 1.9 billion foreign direct investment (FDI) increase. 

Michael McCullough stated that the PH property sector is in a sweet spot.

"The market is doing very well. It's very exciting because of such big developments from these developers. They're making huge, huge investments, which will make really interesting landscape and new communities coming up in the future."

On the other hand, Angela Manese discussed the rise of condotel developments and how buyers today often flip units.

According to Manese, more developers are now catering to the middle market, which supports McCullough's statement earlier, "This is the biggest year ever for residential in terms of supply. Residential is the majority of the construction. It has the majority of the new supplies, and the majority of the gross leasable area that's coming up."

Manese offered advice to OFWs thinking of investing in residential condos.

"Overseas Filipino workers who consider buying a property here should first think of how the property will be used, whether they're planning to rent it out or live in it with their family eventually. When selecting a property, among the prime considerations should the track record of the developer. And if the property will be rented out, location should play an important role in the decision since most renters, usually expats, workers, and students, aim for accessibility. Finally, buying low and selling high in the current market can be difficulty. As such, investors should set realistic expectations and should consider expanding the timeline for maximized returns on investment."

Gerold Fernando highlighted the growing demand for serviced offices.

"Serviced office is a new product in the real estate market. It's basically plug and play. It came in the market because of strong demand and it is attractive for new entrants who want to test the market."

Fernando added that SMEs are driving growth in the serviced office market.

"The IT-BPO and KPO industry, along with small- and medium-scale businesses, creates a higher demand in the leasing market. They have been driving growth particularly in serviced offices. Demand for this concept is expected to be sustained as prime office supply in CBDs remains low until 2016."

The retail sector was also highlighted as the main driver of the economy.

"Retail is obviously a driver of the economy because if few were cashed up, they spend a lot of money. Hence, retail occupancy is at the highest as it has ever been," McCullough said, citing that such property segment is likely 99.9-percent fully leased out.

The hotel market is also expected to remain active, with the growth in tourist arrivals over the next few years.

"With this, hotel room supply will increase to about 9,500 rooms, with current developments on the pipeline. Market developments include the construction of boutique hotels and luxury hotels in top city locations."

McCullough further discussed the restrictions in real estate growth.

"Restrictions in foreign ownership are hindrances to better growth. The FDI remains relatively low as opposed to the Philippines' Asian neighbors. Some amendments on the rules can help turn investor interests into actual investments."

Media guests asked the speakers more questions about the trends of PH real estate.

"Provinces such as Bulacan, Pampanga, Cavite and Laguna have also shown that they could attract foreign investment by providing the spaces for new enterprises to flourish. We hope that more local governments would be inspired by their example and invest in infrastructure, talent and even in crafting business-friendly policies."

The IT-BPO industry will continue to lead the growth in the office leasing market with take-up expected to reach 280,000 square meters this year. Favorable demographics, strong macroeconomic figures and the government's commitment to undertake reforms bode well for the real estate sector, which is expected to continue its positive growth trajectory in the next few years.

It was a successful event that ended on a high note for everyone. Congratulations, team!

From L-R: Gerold Fernando, Associate Director; Angela Manese, Head of the Residential Division; Michael McCullough, Managing Director; and Antton Nordberg, Manager of Research and Consultancy