KMC-Savills concluded its first media roundtable event for 2016 last March 16 at the Makati Shangri-La. This quarter, KMC focused on providing updates on the country's economic and investment environment, as well as the bullish office sector.
The Philippine economy is still bullish
This quarter's media roundtable puts the spotlight on the constant growth of the Philippine economy, which is projected to retain its 5% to 7% GDP growth despite the weakened global economy.
Antton Nordberg discusses PH economic updates, threats, and opportunities.
As per Antton Nordberg, KMC-Savills' Head of Research, the service sector remains as one of the key drivers of economic activity, through IT-BPOs, OFWs and domestic demand. The solid growth of remittances remains supportive of economic activity, composing roughly 9% of GDP and showing a 4.6% YoY growth in 2015.
The BPO sector also has a significant GDP contribution at 7%, and shows no signs of slowing down as Manila is now the 2nd best outsourcing destination in the world by Tholons.
Despite this, structural issues threaten the growing economy.
Nordberg says that there is high level of consumption in the country but it remains light on investments. The country severely lacks capital formation and public spending, which are key to sustainable growth in the future.
Investors, however, remain very positive towards the economy.
Manila is the 8th most preferred city for real estate investors, according to an Urban Land Institute report. Major developers take advantage of this sentiment; they have massive CAPEX plans to cover current constructions and new launches.
Investor demand stays high, with offices still the most wanted asset class. Occupier market is performing extremely well, adn the strong leasing activity is expected to reach new heights in 2016.
Meanwhile, Rosario "Cha" Carbonell provided updates on the office market.
According to KMC-Savills' Associate Director Rosario "Cha" Carbonell, Premium and Grade A office stock will continue its growth across all CBDs until the first quarter of 2018. BPOs will still drive the take-up, with a record high of 435,000 sq m in 2015.
PH's Grade A Office Rents is still at a very low level.
Manila still has the lowest rental rates in the region, retaining its appeal to investors and businesses who wish to achieve significant savings in real estate costs. Ortigas, Alabang, and Bay Area are the top 3 CBDs with the lowest average net rental rate.
After the talk, Cha and Antton answered questions of the media.
"We believe that by improving infrastructure is key towards the ripple effect that will generate thousands of jobs, help economic growth and office growth of other sectors."
Thank you to all our media partners who made our event successful.
We look forward to seeing you again at our next media roundtable.