The Philippines' local real estate investment activity has been slow from January to March 2016 with only a few direct investment deals and new projects announced on the development side, according to the latest Asia Pacific Investment Quarterly released by KMC Savills.
"With only a few direct investment deals recorded, the transaction volume remained low, possibly reflecting trends seen in the global economy which started the year facing rather uncertain conditions, particularly in the capital markets." said the report.
The presidential elections also affected investment activity last quarter as investors exercised more caution and held back investment decisions.
Strong fundamentals, aggressive expansion plans to stimulate activity
According to the report, the focal point of investment demand last quarter has been the Clark Freeport Area, led by Filinvest "who won the bidding for the 202-hectare Mimosa Leisure Estate property through a 75-year lease agreement as a lone bidder with a consideration of PHP800 million."
"Another notable transaction in Clark this quarter was the acquisition of Hotel Stotsenberg and Casablanca Casino by Frontier Capital Group for a consideration of PHP1.2 billion. The property includes 239 hotel rooms, 190 slot machines, and 36 gaming tables." stated the report.
Sta. Lucia Land was also noted as the most active player this quarter, acquiring 13 sites totalling 97 hectares in various locations across the country. KMC Savills reported that this strategy seems to be focused on tapping the underserved economic housing sector that currently has a backlog of 4-million units.
On the development side, two new joint ventures were announced this quarter: Ayala Land and Eton Properties' development of a 35-hectare land into a mixed-use township in Metro Manila, and ArthaLand and Arch Capital's partnership on developing an 8,400-sq m property in Cebu.
Despite the slow start of the year, KMC Savills is positive that PH will see more investments in the coming quarters. "We expect the transaction activity to reach similar levels to 2015, supported by positive economic conditions and the aggressive expansion plans of local developers."
Download the full report here.