London-listed real estate group Savills has reported in its latest Asia Pacific Investment Quarterly (APIQ) Q3/2015 that the Philippines' performance remains strong amid the weakening growth of the global economy, further boosting the property market.
According to Michael McCullough, Savills associate KMC MAG Group Managing Director, the Philippines has not felt the impact of the slow recovery of the global markets because the two main drivers of private consumption (which comprises 70% of the country's GDP), OFW remittances and the outsourcing industry, continue to post bullish figures.
"Remittances have been steadily growing over the past 10 years at 6.2% CAGR in real terms even during the GFC, while the outsourcing industry is showing no signs of slowing down. It is currently the biggest job provider in the private sector, growing year by year with an industry revenue CAGR of 27.7% over the past 10 years."
"Despite the underlying global threats, we expect the current sentiment to remain favourable into next year, whilst the property markets will remain one of the top beneficiaries of the growth."
However, McCullough warned that a key risk for the Philippines lies within its close ties with China. China is PH's third largest trading partner with a 15% share, whose weakened demand could turn the current trade balance to deficit.
"However, as most growth remains domestically driven, weaker growth in China is expected to have a relatively low impact on the country," said McCullough.
Multibillion peso deals continue to brew in the active property market
The Savills APIQ report also listed down some of the most significant transactions the industry has seen this quarter, among them the development of a Php 4.5-billion ($ 96.4-million) Forbes Media Tower in Century City by Mitsubishi JV Century Properties and Century Properties' additional Php 1.0-billion ($ 22.4-million) capital via the Acqua 6 debt facility from Standard Chartered.
Another notable investment is the start of the first phase of the Clark Green City project by Filinvest Land JV BCDA. Once completed, Clark Green City will be the first smart, disaster-resilient metropolis in the country.
Slow growth across Asia-Pacific
Meanwhile, Savills also reports that majority of PH's neighboring countries continue to struggle as they work through their slow recovery.
Japan's growth has stalled although outlook remains positive with continued support from the Bank of Japan. Real estate activity remains robust in the third quarter in both value and volume terms.
China continues to loosen its monetary policy to boost its economy, improving outlook for capital value appreciation in both residential and commercial market sectors.
In Hong Kong and Singapore, real estate activity remains low due to the stringent government measures, affecting investor sentiment as rents show signs of weakening.
Vietnam, however, has posted its highest GDP growth since 2010 (6.5%) this quarter and with promising FDI inflow, the country is on its way to a strengthened economy, which is expected to provide a remarkable boost to the property market.