KMC MAG Group optimistic on real estate outlook

Manila Bulletin , 11-20-2013

The sustained economic growth of the Philippines is expected to further buoy positive investor sentiment toward the real estate sector, according to full-service real estate firm KMC MAG Group.

In a media briefing, KMC MAG Group Managing Director Michael McCullough pointed out that 2013 has been a year of opportunities for the real estate sector, owing to the consistently strong GDP growth in the first half of the year.

"The factors behind such growth are the active construction industry and the business process outsourcing sector, as well as the high rate of overseas Filipino workers' remittances. Credit rating achievements have increased investment interests in the Philippines and a stable political climate under the Aquino administration has also contributed to growth," McCullough said.

He further pointed out that key interest rates are low, offering good debt financing opportunities for real estate. Moreover, increased commercial and residential real estate-related loans signal an active property sector.

"We've seen continuously low vacancy rates, as there is strong take up within Central Business Districts. Makati continues to attract more institutional investors due to relatively high yields at 8-10%, and there has been an additional supply of 340,000 square meters of space introduced this year, mainly in Bonifacio Global City," McCullough explained.

Increased purchasing power of the middle class has sustained the demand for subdivisions, townhouses, and condominiums. The strong consumer spending has benefited the retail sector, translating to an increase in gross floor area of retail space in Central Business Districts by 337,000 square meters this year.

"Manila remains the best value city to do business, largely because of the relatively low real estate costs, and Makati remains to be the location of choice for luxurious residential spaces," McCullough added, pointing out that favorable economic conditions and a highly skilled labor pool have attracted more international KPO/BPO firms to come to the Philippines.

"The increase in foreign entry seen through the expanding BPO sector also drives the residential market, especially for high-end apartments near the Central Business Districts," McCullough noted.

Meanwhile, Melo Porciuncula, Head of Capital Markets and Investments of KMC MAG Group, noted that the Philippine market is now prime for investment across all segments from development to acquisition. "The office market offers institutional investors the opportunities to increase cash flow and diversify portfolio. The residential and commercial spaces, meanwhile, offer retail investors viable alternatives for medium- to long-term investing," Porciuncula shared.

In the same media briefing, KMC MAG Group announced that it is officially an International Associate of Savills, a leading global real estate advisor with presence throughout the Americas, Europe, Asia-Pacific, Africa, and the Middle East.

"Our affiliation with Savills enables us to capitalize on the opportunities in Southeast Asia and the Philippines. Specifically, our capabilities in asset, property, and facilities management, as well as services in the retail and residential spaces will be strengthened as a result of this partnership," McCullough stated.

Savills in turn has identified the opportunities in the Philippines, including international investors, Filipino investors moving into overseas markets, global corporate occupiers and retailers, high net worth individuals, family offices, and the demand for hosting regional conferences.