Manila office space market growth seen slowing
Metro Manila’s office property market has entered a phase of slowing growth after a five-year run-up but it remains one of the most attractive in the Southeast Asian region to date, global property consulting firm Jones Lang Lasalle (JLL) said.
In a briefing yesterday, JLL managing director for Singapore and Southeast Asia Christopher Fossick said that among various office property markets in the region, Philippines and Vietnam were among the most attractive.
JLL also sees bright prospects for Metro Manila’s retail property segment despite the opening of more shopping malls, noting that this segment is still at the stage of rising rents compared to the slowing growth in Jakarta and the falling rates in Kuala Lumpur and Singapore. This segment is supported by the increasing consumer affluence and the Filipinos’ penchant for shopping.
For the office sector, although Fossick doesn’t see the Philippines becoming a major market for multinational corporations looking for headquarter space, he said “(Metro) Manila is on the world stage for something unique and that is its ability to provide BPO (business process outsourcing) and voice services to the world.”
Across the region, he said the Philippines’ stature and importance in the 10-member Association of Southeast Asian Nations (Asean) was growing.
He said Metro Manila was among the most attractive office markets right now because rental rates were still growing, although slower, compared to the declining rates in Singapore, Jakarta and Kuala Lumpur.
“In the last five years, we have seen strong growth in (Metro Manila office) rental on the back of exception ally strong demand and the very limited supply, and a very low-cost base,” he said, noting that office rental rates were very low six years ago in the aftermath of the Wall Street-epicentered global financial crisis.
Fossick said his sense was that the local office property sector had moved into a phase of slowing rental growth in the second half of this year in anticipation of extra supply coming in. But JLL country chief Lindsay Orr also noted that rates today were only aligned with the rates seen before the global financial crisis of 2008-2009.
Fossick said office rental rates were still rising in Metro Manila and with this, there would be appreciation in capital values.
Office rents in Metro Manila are projected by JLL to rise by a modest 4 percent in 2016, slower than the 5 percent this year.
New office supply in Metro Manila was expected to be high at 870,000 square meters next year.
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