Reaping gains from China relations
Investments of Chinese investors in the Philippine real estate sector have admittedly been few and far between.
But there is a reason to be optimistic, as property developers may likely benefit from the Duterte administration’s pivot towards China, in an effort to regain its good relations with this economic giant.
“Evidently, the warming relations between China and the Philippines as well as the (country’s) rising attractiveness as an investment hotspot should result in more Chinese property investments flowing in into the country,” said Ieyo de Guzman, Colliers Philippines executive director for investment services.
According to Colliers International Philippines, it expects a surge in Chinese investments over the near to medium term.
This was on the back of the Philippine government’s improving relations with China and the Chinese investors’ continued confidence in the country as a major real estate investment hub in the region.
Proof of this improving relations was the country’s recent hosting of the 28th Philippine-Chinese Joint Commission on Economic and Trade Cooperation (JCTEC), finally ending the five-year hiatus on the conduct of this bilateral mechanism.
Discussions between the trade ministers of the Philippines and China during the JCTEC covered the Six-Year Development Program for Economic and Trade Cooperation that would serve as the overall framework for economic relations from 2017-2022.
Other discussion highlights included the list of priority
infrastructure projects to be funded by available Chinese credit facility, as well as potential private sector investments from China on oil downstream projects; aviation industry (including aircraft parts manufacturing); waste to energy through gasification; ship building; ship repair facility; and integrated steel facility.
Colliers Philippines noted that the industrial sector would be a key property segment seen to benefit from the increased investment inflows from China.
It said that a number of Chinese firms involved in the manufacture of steel, plastic injection molded parts, and power transformers have pledged to establish facilities in the Cavite-Laguna-Batangas corridor. Add to that the planned development of the Philippines-China Industrial Park, which is also expected to attract even more Chinese investments in the country over the near to medium term.
Apart from the Chinese firms, other foreign manufacturers are also expected to take advantage of the Philippines’ preferential trade deals with the Association of Southeast Asian Nations (Asean) and the European Union (EU).
“Colliers sees the demand for industrial space in the Cavite-Laguna-Batangas corridor growing over the near term and this should encourage property firms to develop more industrial parks in the region,” explaned Joey Roi Bondoc, research manager at Colliers Philippines.
According to Bondoc, total industrial stock within the Cavite-Laguna-Batangas area reached 7,060 hectares as of the second half last year, up from the 6,898 ha recorded in the first half of 2016.
“The Duterte administration’s continued efforts to attract more manufacturing investments should lead to higher demand for industrial lots and facilities in Calabarzon (Region IV-A) and this, coupled with limited supply, should further raise land values in the region,” he added.