February 25, 2018, 7:34 am
Facebook iconTwitter iconYouTube iconGoogle+ icon

Lack of hard, soft infra challenge to growth

Property consultant Santos Knight Frank (SKF) said more investments should be poured into  infrastructure in order to further bolster the Philippines’ potential as an investment hub in East Asia, the real estate sector in particular.  

“The potential challenge is infrastructure. We had been a victim of our own success. We need better roads for added capacity. As a knowledge-based economy, education as an infrastructure is needed. We need to get the those higher engineering programs on track (for one),” said Rick Santos, SKF chairman.

SKF said the Philippines’ real estate industry looks “rosier than ever” post-Asean Summit after the government inked key bilateral trade deals and funding for critical infrastructure initiatives from East Asian neighbors.  

Santos said the commitments signed “will be vital to the long-term expansion of the real estate sector and the broader economy, which once again outperformed China with a 6.9 percent GDP growth in the third quarter.” 

The country signed 14 agreements with China that include the development of industrial parks, railways, bridges and agricultural facilities. The Philippines forms part of the Chinese-led Belt and Road Initiative, a $1-trillion partnership that involves 70 countries and 40 percent of global GDP,” noted Santos. 

He saSantos at the same time noted that the country also entered agreements with Japan on the P46 billion deal for the first phase of the Metro Manila Subway Project and a P4 billion funding facility for the Philippine-Japan Friendship Highway in Bulacan. 

“With deeper cooperation between the Philippines and East Asian neighbors such as China and Japan, prospects for the Philippines’ property sector are stronger than ever before. Enhanced infrastructure and access naturally attract more institutional and private investments that, in turn, lead to accelerated countryside development and growth of secondary cities,” Santos  said. 

“We anticipate the office, residential, retail and industrial sectors to grow further in terms of supply and activity thanks to stronger regional trade and infrastructure cooperation,” he added. 

Santos said “sound macroeconomic indicators continue to render the Philippines as one of the strongest performers among emerging economies in Asia.”

“With greater investment interest coming out of the Asean Summit, there is no stopping the Philippine real estate sector from growing at an accelerated pace next year. Manila today is Hong Kong or Singapore 30 years ago. We thought we’ve seen the best of the real estate market --- but it’s only about to get even better in 2018,” said Santos. 

SKF said rental growth in Manila over the last 12 months has been the highest across Asia, pointing to a strong demand for office space in the market in the backdrop of a “healthy vacancy rate” which provide occupiers with a range of options. 

SKF said  Manila’s office market is “unique” with its rental rates still going up despite continued pumping out of supply. 

“You normally expect lease rates to go down when you have a large office supply coming, instead rental growth in Manila has been the highest across Asia,” said Santos. 

SKF noted that in Fort Bonifacio alone, headline lease rates already breached the P1,000 per square meter (sq.m.) market as of the third quarter this year at P1,027.27. In Makati lease rate stood at P1,263.15, in Ortigas at P660.71, and in Bay City at P725.43. 

The overall vacancy rate in Manila meanwhile stands at 4.62 percent, up from 3.25 percent last year. SKF said the increase in vacancy was a result of completion of several buildings in the third quarter, but it remains to be at a “robust level.”

SKF said office space net absorption is estimated to go beyond 600,000 sq.m, with another 946,782 sq.m. expected to go online by next year. 

Of the amount, 409,377 sq.m, or about 76 percent will be supply by Bonifacio Global City alone. 

The residential market meanwhile is seen to post “unprecedented growth” as key drivers --- office sector, middle-income families, and cross-border investments --- ramp up demand. 

SKF said Manila residential space is expected to grow “more than the size of Bonifacio Global City --- 3 million sq.m. or 50 percent of the current stock --- in the next four years. 

“People are the secret sauce in the success of the Philippine office sector and it will be the same for the residential market,” said Santos. 

SKF said the residential market is dominated by the middle-income and high-end/luxury segments of the market and are sent to continue going strong. The Bay Area is the hottest residential investment market, far exceeding all other districts in terms of take-up, it noted. 

SKF noted that as of the third quarter, there were 207,182 residential units available in the market, 9,415 units of which had been launched in the first nine months of the year. Another 13,858 units meanwhile were turned over in the same period. 

Units in the middle-income market currently range between P78,000 to  176,000 eacht, the high-end between P108,000  and  P187,000, and the luxury segment at P182,000 to  P350,000. 
No votes yet

Column of the Day

Rappler’s continuing saga

By DAHLI ASPILLERA | February 23,2018
‘Without a court TRO against the SEC ruling, Rappler’s accreditation in Malacañang was considered revoked.” – Senior Deputy Executive Secretary Menardo Guevarra.’

Opinion of the Day

Duterte does not understand media’s role in a democracy

By ELLEN TORDESILLAS | February 23, 2018
‘This is funny if it didn’t violate the constitutional guarantee of freedom of the press.’