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
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
"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
"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
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
"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
To support these decongestion efforts, McCullough recommends
that as more urban areas be set
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
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