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‘Dragon’ seen to fire up PH market

The warmer relations between the Chinese and PH governments is seen to benefit the Philippine economy with growth trickling down to property segments
By: - Reporter / @amyremoINQ
/ 05:37 AM April 14, 2018

The Philippine real estate market may stand to benefit from China’s ambitious “One Belt, One Road” initiative.

While the Philippines does not lie directly along the proposed routes under this massive economic and development project, the said initiative is seen to boost Chinese investment in the emerging Southeast and South Asian markets including the Philippines.

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This was according to Colliers International Philippines in its latest radar report entitled, “China’s One Belt One Road: The Dragon Spreads Its Wings over Asia,” which stated that there appears to be plenty of room for cooperation that could benefit the Philippines, given especially Beijing and Manila’s warmer relations under the current administration.

“The warmer relations between the Chinese and Philippine governments have been benefiting the Philippine economy with growth trickling down to property segments such as office, residential, hotel, and industrial. A more active participation of China into the Philippines’ ambitious infrastructure development program should help sustain growth in the local property sector over the medium to long term,” Colliers Philippines explained.

Potential opportunities

According to Colliers, the potential opportunities are spread across almost all real estate segments—from office spaces, hotels and resorts, residential, to industrial park development. Add to that the local infrastructure projects in which more Chinese investors are expected to participate.

As it is, the Philippines is already reaping the benefits of warmer relations as President Duterte witnessed earlier this week the signing of letters of intent between Philippine and Chinese businessmen in Hainan.

Should these projects push through, some $9.5 billion worth of fresh investments and over 10,000 jobs in the country are expected to be generated. And some of these investment pledges are seen to directly benefit the property sector.

These, according to Colliers, were the $3.46 billion project with Shangai GeoHarbour Group that involves land reclamation and development projects; development of tourism projects and electronic industry parks with Zhongfa Group; construction of the China-Philippines International Techno-Industrial Zone with China National Heavy Machinery Corp.; and development of infrastructure and construction projects with Haocheng Group.

Investor influx

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In terms of office space, Colliers expects the influx of Chinese investors to sustain the demand amid the decline in take up by the business process outsourcing (BPO) industry.

According to Colliers, inquiries picked up again in the fourth quarter of 2017, with some Chinese firms requiring between 20,000 sqm and 30,000 sqm per site. Chinese offshore gambling firms have also started to open shop in Cebu, accounting for almost 25 percent of recorded transactions last year, it disclosed.

“The strong offshore gambling sector is also driving residential condominium sales especially in the Manila Bay Area where office buildings are developed alongside residential towers. Chinese investors accounted for 10 percent of SM Prime’s international condominium sales in 2017 from less than 5 percent in 2016 while Ayala Land noted that the Chinese buyers accounted for nearly 50 percent of its international sales last year,” Colliers explained.

“The take up from Chinese investors helped propel Metro Manila condominium sales to a record-high 52,600 units in 2017 from 42,500 in 2016,” it said.

Tourism surge

The Philippines has likewise seen a surge in Chinese tourists, recording a 43 percent growth in 2017 from a year ago, thus prompting many local developers to put up more hotels catering to this particular market.

“Colliers believes that the influx of more Chinese visitors will play an important part in sustaining hotel occupancy of between 65 percent and 70 percent across Metro Manila over the next 12 months,” it stated.

More specifically, Colliers said it is seeing the aggressive development of two- and three-star hotels in Manila Bay and the fringes of the Makati central business district due to continued surge of Chinese tourists.

DoubleDragon Properties Corp., for one, has earlier announced that it plans to have 2,000 rooms under the Jinjiang brand by 2020. Jinjiang is reportedly popular among Chinese tourists and businessmen.

Investment destination

Industrial park development meanwhile is also emerging as a potential growth area. Colliers believes that the country’s improving stature as an ideal investment destination should encourage more Chinese firms to aggressively invest in the Philippines in the next few years, a move seen to raise the demand for industrial space.

Colliers pointed out that among the crucial deals signed during the Asean summit in Manila last year was the memorandum of understanding (MOU) between the Philippine and Chinese governments on industrial park development. This should raise industrial supply in the country particularly now that major developers are heading north of Manila.

“Chinese industrial park developers are aware of the rising demand for industrial space in the Philippines given the country’s expanding manufacturing and export base,” it added.

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