Strong economy to fuel property sector growth
The sustained growth in the real estate industry this year is expected to be fueled by the country’s strong economy and low interest rate regime, which were seen to be “compelling enough to trigger additional developments,” according to a property consultancy firm.
In its latest Market Insight report, Pinnacle Real Estate Consulting Services Inc. said it has remained “business as usual” for the Philippine property sector, whose growth is seen to be driven by the continued rise in demand for office, retail and industrial spaces this year.
“By now, the off-the-cuff talks of President Duterte is seen not to be too different from that of the President-elect Donald Trump of the United States. Politicians, businessmen, and the people of both countries are slowly accepting the results of their respective democratic processes, even if it may taste bitter to some groups,” stated the report by Jojo Salas, director for research and consulting at Pinnacle.
“It may be a good thing that the national elections of the Philippines coincided with the Presidential elections of the US in this cycle. The expected wait-and-see attitude is steadily giving way to taking advantage of the supply-and-demand gaps in the different sectors of the real estate market,” the report said.
Based on the report, the rising demand for office spaces will be driven by the growing requirements of the business process outsourcing (BPO) industry, resulting in expected high occupancy levels and stable rents. Pre-selling of office spaces was expected to remain active, it added.
The same trend is expected for retail spaces, given further expansion of the big players and proliferation of different retail platforms, and for industrial spaces as investors continued to flock in the country and given the steady accreditation of economic zones.
As for the residential segment, delays in turning over of new buildings are expected to continue this year given the shortage in skilled laborers and increasing competitive prices.
“The BPOs and traditional companies will continue to look for office spaces; end-users and investors will scout for suitable residences; small retailers shall continue taking advantage of Filipinos affinity to shopping; tourists will continue to fill up hotel rooms, and manufacturers will ceaselessly look for optimum industrial spaces. As usual, savvy real estate developers will continue do their due diligence, and look for the unsatisfied demand, and supply the gap,” the report said.
“The big players will usually go for first mover advantage. With their machines, the Ayala and SM Groups shall continue to pace real estate developments,” the report stated.
“The Megaworld Group allocated P150 billion for its capital expenditure for the remainder of 2016 and up to 2017. The Filinvest Group is devoting P5 billion just for housing and condominium developments in the next three years. It is likewise spending more on its Filinvest Corporate City… All of the big players are competing for their market share,” it added.
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