Congestion, infa lack dampen property

Malaya by Antonio Delos Reyes12-04-2014

Memand in the real estate market is still going strong as of the third quarter of the year, fueling growth in the industry as real estate developers continue to address the growing needs of the market.
However, a real estate services firm said  decongesting Metro Manila and building the necessary infrastructure will play a crucial role in the continued growth of the industry and the country's economy as a whole.
According to real estate services firm KMC MAG Group Inc., demand for real estate in the metro is still rising. This has prompted real estate developers to invest heavily on new projects. 
"We are still fairly optimistic. If it's any indication of how the market is doing, we can see that the big real estate players' capex commitment is still quite high," said Jose Carmelo Porciuncula, head of KMC MAG capital markets and investments.
According to the report, Ayala Land and SM Prime lead the pack with P70 billion in capex for 2014 followed by Megaworld at P46 billion, Vista Land and Filinvest at P20 billion and Robinson's Land at P16 billion.
Office space demand is being pushed upwards, accounting for 66 percent of transaction volume in the past 12 months. The high share of office space has been attributed to business process outsourcing  which have set up shop in the commercial business districts (CBDs), namely Ortigas, Makati, and Bonifacio Global City.
In the residential segment, there has been shift in the market to the midrange instead of the luxury segment. According to Porciuncula, this is due to the changing needs of the consumer market. 
"We are seeing a late upswing in the midrange residential segment due to a rising demand for more affordable units for end use. The initial sentiment here is that this is for families who are looking to improve their living premises or an interim housing solution for their growing family," Porciuncula said.
The growth in the midrange market has also expanded the scope of real estate developments, with more developers creating projects in Quezon City, Alabang and Paranaque. 
The shift away from the traditional locations and established CBDs is  a key factor in decongesting Metro Manila and two areas are being scrutinized as the next CBDs, namely Quezon City and the Bay City.
Quezon City is slowly transforming itself as a new CBD especially with the development in the north triangle area. "Ayala is leading the pack with Vertis North and then you have the nearby mixed-use developments like Eton Centris, Ayala Town Center and UP Technohub,"  said Yves Luethi,  KMC MAG vice president.
The Araneta Center in Cubao is also in the process of transforming into a major mixed-use retail district with plans to add more residential towers, BPO  buildings and hotels.
The Bay area is a relatively new development but it has fast become a choice location for hotel and casino developers. With the opening of the Entertainment City and Nobu Hotel among others, it is expected to become the future tourism hotspot which will help bolster the tourism sector. 
In line with that, several business parks are already being developed such as the Aseana City, Metrobank Group's Metropolitan Park, and SM's Future City.
However, KMC MAG stressed the need to place the necessary infrastructures to ensure the proper growth of Quezon City and Bay City. 
"Previous investments by the government and the private sector have shown that these areas can grow into central business districts," said  Michael McCullough, managing director of KMC MAG. "For both Quezon City and Bay City, it will becritical toprovidemore publictransport optionsandensurethat social servicesare in place for these two areas to fully develop."
McCullough added that spatial planning will be critical to ensuring that new business districts will not experience the same degree of congestion. "The new business districts will need to move away from building because the demand is there or because the workforce is there, and instead move toward managingthediversespatialneedsofvariousstakeholders," said McCullough. 
To support these decongestion efforts, McCullough recommends that as more urban areas be set upoutsideofMetroManila,thegovernmentmustinvestininfrastructure to improve the transportation network and integrate the different networks around the country. "The Philippines has the best credit ratings it has ever had. It also has the knowledge and support of institutions such as the Japan International Cooperation Agency, among others," said McCullough. "The only thing the Philippines needs is the political will to make these large-scale changes possible."
The congestion in Metro Manila is becoming a deterrent for foreign investors due to lost productivity and lower quality of living due to the large population density. 
"Filipinos are looking to the government and to developers to help them make travelling to work, school,ortotheirhomeseasier,to developspacesforthemto live, play, and work," said McCullough. "The agingroads and thedecliningqualityofthe public transport system are deterrents for both the locals and the expats who live and work in the Philippines. If that's the first impression theyget, itwillbemoredifficulttoget themto buyinto what else the Philippines offers."