Metro Manila this year is expected to boost its residential and office inventory at a faster pace than most other Asian cities as demand is seen to remain strong on the back of a growing economy, property consultant Jones Lang LaSalle (JLL) said.
For the last 10 years, Southeast Asia had been under the shadow of larger economies in the region, like China and India. But the region is now seeing a “renaissance,” attracting greater investor interest not just in real estate but across broader segments, said Chris Fossick, JLL managing director for Singapore and Southeast Asia.
In Southeast Asia, JLL’s fastest-growing business is in the Philippines because of its rosy domestic growth story, Fossick said Tuesday during a briefing.
JLL sees the inventory of high-end residential property in Metro Manila rising by 47.2 percent this year, faster than that of Bangkok with 15.1 percent, Jakarta with 13.6 percent, Shanghai with 11.2 percent and Kuala Lumpur with 9.1 percent.
“That’s a huge surge in supply of stock. That doesn’t mean it won’t be taken up. There are various reasons why it will be taken up—urbanization and the people’s desire to invest will have an impact,” Fossick said.
David Leechiu, JLL country manager, said demand for residential units remained strong as local savings rate continued to build up, apart from contributions of overseas Filipino workers (OFW) and the business process outsourcing (BPO) sector which, for many years, had been the traditional drivers of the economy.
There is likewise an increasing demand from foreign investors—those coming from Hong Kong, the United States and Singapore—looking to buy residential condominium units to rent out, Leechiu said.
“The foreign market is starting to come back, and they’re not here anticipating they can flip the property in a few years. They’re here to anticipate the rents,” Leechiu said.
In a local condominium development being serviced by JLL, for instance, Leechiu noted that there was a cluster of units bought up by 500 individual Singaporeans 18 months ago.
For office supply, Fossick said, significant supply has yet to come, but take-up is improving in most markets.
“It’s a mixed bag,” he said, noting that in Singapore and Ho Chi Minh City in Vietnam, rental rates are going down, while in the Philippines, rents are rising supported by the growth in BPOs, as well as multinational corporations expanding global back-office operations.
Grade A office stock in Metro Manila is projected to rise by 18.7 percent this year, next only to Ho Chi Minh’s 33.5 percent, JLL said. Other markets like Bangkok, Singapore and Sydney are not expected to see any office supply expansion this year, while Jakarta, Kuala Lumpur and Mumbai are projected to increase inventory by 9.3 percent, 5 percent and 10.6 percent, respectively.