2013 PROPERTY FORECAST
Hotels seen to flourishBy Tessa R. Salazar |Philippine Daily Inquirer
The hotel industry, as a result of the Department of Tourism’s effort to attract more foreign visitors and stimulate increased activity of domestic tourists, is poised for a growth spurt this year.
Colliers International Philippines Research says hotels are expected to enjoy higher occupancy rates due to the “aggressive overseas promotions” by the Department of Tourism. Colliers International, in a statement, says that “a robust economic environment will propel Metro Manila hotel occupancy rates above 70 percent on average.” It adds: “The debut of Pagcor Entertainment City will also encourage more visitors to the country, particularly from neighboring nations.”
But Claro dG. Cordero Jr., Jones Lang LaSalle’s head for research, consulting and valuation, reveals a caveat: “Given the additional hotel room supply coming from new hotel developments expected to be completed in 2013 and the insufficient infrastructure support (e.g. airport congestion), we think that it would be difficult to top the performance of hotels in the previous years—i.e., average occupancy rates of about 70 percent.”
His advice: “To benefit from the current wave of foreign tourists and visitors going to countries in the near- to medium-term, such as the Philippines, the industry needs a comprehensive and coordinated tourism development plan that will involve all the stakeholders of the industry.”
Enrique M. Soriano III, Ateneo program director for real estate and senior adviser for Wong+Bernstein Business Advisory, also sees existing hotels to continue to enjoy higher occupancy rates as more and more foreign visitors are extending their stay in the Philippines, indicating that the country will remain as a favored tourist destination. Business and leisure hotels would, therefore, see a spike in demand in 2013.
Immigration records showed that in 2012, the bureau’s visa extension office was swamped with 172,055 applications for extension of stay by foreign tourists. The figure was 13 percent higher than the previous year’s 151,913 applications.
Citing such figures, Soriano concludes this “a positive sign that should prompt the Philippine Retirement Authority (PRA) to initiate an SRRA (Special Resident Retirement Visa) conversion strategy for these tourists similar to what Thailand and Malaysia have been doing for the past decade.”
Hotels in Cebu, Boracay
CB Richard Ellis Philippines, in a recent press conference in Makati, says that with tourism efforts now into full swing, a captive international market for property destinations in Cebu and Boracay will revitalize investment and luxury development in these areas.
CBRE adds that the increased demand for MICE (meetings, incentives, conferences and exhibitions) and accommodations will drive the presence of 5-star international brands in the country. It cites Aqua Boracay by yoo in Boracay and Moevenpick Hotel & Residences in Cebu.
Introduced during the CBRE presscon as the newest luxury beachside residential development in Boracay Island, which was recently named “Best Island in the World” by international travel magazine TraveL+Leisure, Aqua Boracay by yoo is set amid 16,000 sq m of lush tropical rainforest. The resort will be positioned in the heart of secluded Bulabog Beach, offering sanctuary from the active D’Mall across the island, where a wide variety of world-class restaurants, bars and shops can be found.
Representatives of Aqua Boracay by yoo Marco Biggiogero (chair) and Mark Rudnicki (head of marketing and finance) who were present during the press conference, said this would be the first resort residence designed by the yoo design studio in the Philippines. The company is based in London. The design, marketing and branding company has been working with international developers on a multitude of residential, hotel and commercial projects throughout Asia, Australia, Europe, Africa, North and South America and the Middle East for over 10 years.
Softening retail industry
The retail sector, meanwhile, is seen to slightly “soften” due to an increase in new supplies.
Colliers International Philippines says that a short-term uptick in vacancy would likely occur due to the delivery of 214,000 sq m of new retail stock in 2013. It says, however, that overall retail sales would remain healthy, driven by robust consumer spending, growing middle-income population, sustained growth in overseas Filipino remittances, all of which would stabilize overall Metro Manila retail vacancy rates to below the 10-percent level.
Cordero tells Inquirer Property, “Vacancy will remain healthy due to the strong pre-leasing of mall owners/operators. Majority of the new developments expected to be completed within 2013 have been developed by the major players, who have a long list of waiting operators.”
Cordero says that with the support of overseas remittances and the rising domestic consumption, the entry together with the expansion of new international retailers is likely to continue in 2013.
Soriano says a softening retail sector may “likely affect the tenancy rate in the big player category, especially developers in the regional shopping center segment.
“The leasing market will be further strengthened by occupier demand coming from local retailers, but growth will likely be in the boutique and niche retail category in Metro Manila and in the progressive cities with a heavy middle market population. New retail concepts are being spun out at an ever-increasing rate,” he observes.
For major mall developers looking for a growth source, Soriano adds that they will naturally continue to expand to underserved and untapped growth centers, and possibly even overseas.
Soriano says: “We are seeing demographic shifts in the population and changes in where people will want to work and where they will want to shop. This shift has created a strategy in the retail sector with the proliferation of mixed-use office-retail buildings and residential condominium developments. Retail sales growth will be buoyed by the demand coming from residents and employees and the stable economy will sustain consumer confidence for 2013.”
He concludes: “Five years after the financial crisis triggered by a housing bubble, the global economy is convalescing. The Philippine economy is poised to move up. Real estate markets in all segments will grow. Some developers will do better (than others) because they have a strategy and they found exactly the right position.”