Real Estate Continues To Have robust Investment Activity, Says Report

Yahoo! News PH, 09-10-2014

Projected to have an economic growth rate of 6-7% in the coming years, the Philippines is expected to retain robust investment activity, especially in real estate, according to a property consultancy.

In their mid-year report, KMC MAG Group has issued that Commercial Business Districts (CBDs) will continue to enjoy the lions share of real estate investments owing to the rise of the BPO (Business Process Outsourcing) industry.

Demand for [real estate] will be driven by attractive yields posted across all property types, though the focus of the investors will continue to be in properties within the CBD, states the report.

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.

Up to 160,000 sqm of office spaces were integrated into the major CBDs within the first half of 2014. Another 140,000 sqm are expected to be completed by the end of the year.

As for residential developments, the group issues that the market is moving in a different direction. Developers are now projected to focus on lower to mid-end segments, churning out smaller and more affordable living spaces.

[O]nly projects priced at reasonably affordable levels will enjoy higher take-up, as the target buyers are increasingly coming from the middle class, the report reads.

[L]arge-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 rates are forecasted to increase barely over inflation by another 3-5% year on year, keeping the gross yield within 8% to 10% spread.

Overall, the group espouses a positive outlook for the real estate industry, citing, as well, that prime malls may enjoy a rise in rental rates for their retail spaces, owing to a growing consumer base.