Property consultant sees CBDs luring investors
Business Mirror by Dennis Estopace, 09-05-2014
WITH a "very positive" outlook for the Philippines property
market, real-estate services firm KMC MAG Group said investors'
focus will continue to be in properties within the commercial and
business districts (CBD).
In its Midyear 2014 Report, the property consultant said,
"investment activity is expected to stay robust, especially in the
country's real-estate sector; demand for which will be driven by
attractive yields posted across all property types."
"The leasing market, driven by the IT [Information
Technology]-BPO [business-process outsourcing] sector, retains a
positive atmosphere [while] the residential market continues to
grow at a steady rate," the report said.
On the other hand, the current positive economic situation,
leading to the rise in private domestic spending, is creating an
opportune condition for the retail segment of the real estate
sector, the report said. "Supported by growing arrivals, the
favorable investment climate for the hotel sector remains, while
the serviced office market remains strong as newly opened business
centers are being leased out at a very rapid pace," the report
According to the 6-year-old company, approximately 140,000
square meters of office space in the CBDs is expected to be
completed by the end of 2014.
And while BGC and Ortigas CBDs have turned their situation
around-in 2013, both cities had low supply-the Makati CBD stock is
expected to stagnate in the following years.
"Looking ahead, the strong leasing demand from the BPO sector
will drive the market for the coming years. This is expected to
result in higher rental and capital values in all real estate
segments," KMC MAG said in its report.
The company also "expects the Premium and Grade A office markets
to sustain its current pace with rental rates and capital values
both expected to increase 7 percent year-on-year (YoY)."
"The residential market, meanwhile, is moving in a different
direction." KMC MAG said it expects developers "will continue to
actively launch their new projects, shifting focus from luxurious
developments to lower to mid-end segments."
"Needless to say, only projects priced at reasonably affordable
levels will enjoy higher take-up, as the target buyers are
increasingly coming from the middle class." Small-sized apartments
may become popular, according to KMC MAG, "and large-sized units
may become the bane of developers."
"The high-end residential market will only have a modest growth
as a result of a weakening demand from its target market." The
company forecast rates to increase barely over inflation by another
3 percent to 5 percent YoY, "keeping the gross yield within the
8-percent to 10-percent spread." "Our positive outlook for the real
estate sector also extends to Manila's retail market. We foresee
that retail space in prime malls may hold opportunities for a rise
in rental rate, as the larger population catchment will continue to
provide strong retail sales."
KMC MAG added the retail market's "sustainable" development will
justify the rental increase of 7 percent to 10 percent "as shopping
center landlords are in a strong position to attract both existing
retailers and new brands for market entry."