Bucking the slowdown across Asian markets, the Philippines’ property sector is expected to continue accelerating in 2014, which is seen as an unprecedented year for real estate investments in the country.
“Despite recent calamities, the country’s real estate sector is a buoyant market and global investors are starting to recognize the country as a top investment spot in Asia-Pacific. No longer is the Philippines an underestimated market, investors now see the sweet spot that it is in all property fronts: Office, residential, industrial, retail and leisure,” CBRE Philippines chair and founder Rick Santos said in a briefing on Thursday.
CBRE, according to Santos, sees the Philippines remaining as one of the top investment destinations for companies wanting to set up new offices or expand existing operations, with Fortune 100 companies seen drawing up contracts for long-term leases of about 10 years and occupying some of the world-class developments being put up today.
CBRE also sees more developments outside Metro Manila such as in Clark and Subic up north and in Cebu, he added.
In his presentation, Santos said Metro Manila and Metro Cebu were identified as the best outsourcing destinations globally. While office takeup has been traditionally from the information technology-business process outsourcing (IT-BPO) and call center operations, expansion for back office of multinational operations, particularly from banking and finance, health management, and game development, is expected to share in the forecast takeup of 600,000 square meters nationwide for the year.
Responding to this demand, an estimated 550,000 square meters of additional office supply is expected to come online, with majority located at Quezon City.
“IT-BPO industry is fueled by increased new investments from large and mid-sized foreign providers and expansions of established locators across many of the country’s upcoming and alternative delivery locations,” said CBRE Philippines vice chair Joey Radovan in his presentation Thursday.
According to Radovan, majority of the IT-BPO jobs were in Metro Manila, whose absorptive capacity is still not fully used. There also remains a huge room for expansion, particularly in the countryside.
Although the Makati central business district remains to charge the highest office rental rates, it offers the lowest prime rate across Asia at $26 a square foot a year, followed by Bangkok and Bangalore, with rates of $32 and $33 per sq. ft. a year, respectively, Radovan further said.
The local manufacturing sector is also seen to continue to gain renewed interest from Northeast Asian firms as the country has the most cost-effective land value for industrial properties at $8.66 per sqm when compared to traditional hubs such as Bangkok ($13.38 per sqm) and Beijing ($29.12 per sqm).