But the factors that are expected to drive that promising growth will slightly differ compared to what has driven the industry in the past decade.
Such factors include a diversified office tenancy as well as the rising demand for flexible workspaces and warehousing, according to the latest report of Colliers International Philippines entitled, “Top 10 Predictions For 2018.”
Other factors that have and will help drive the strong performance for the property sector include a sustained GDP growth over the next three to five years.
“Perennial growth drivers such as household consumption remain robust while manufacturing and foreign investments’ combined contribution to aggregate economic output continues to expand,” Joey Roi Bondoc, manager for research at Colliers, said in a separate interview with the Inquirer
“Overall, OFW (overseas Filipino worker) remittances and outsourcing revenues should sustain strong domestic demand, partly shield the Philippine economy from global economic shocks, and provide trickle-down benefits to key segments of the economy, including property,” Bondoc further explained.
Here meanwhile are the Top 10 predictions for the real estate industry according to Colliers.
1 Infrastructure-led GDP to buoy property
Much of the country’s growth will hinge on ramped-up infrastructure spending, which should support the Duterte administration’s commitment to build crucial projects throughout the country.
The ushering in of the “golden age of infrastructure” also lends support to the government’s decentralization push which should unlock land values in areas outside of Metro Manila and stimulate business activities in the countryside.
Ultimately, we see the government’s infrastructure policy dictating the strategies of both local and national developers.
2 Metro Manila condominium leasing to remain challenging
Residential condominium leasing in Metro Manila remains challenging, driven by the influx of new condominium completions in major business districts and fringe locations.
Colliers expects developers to continue venturing into residential projects in second-tier and third-tier cities all over the country, where demand primarily comes from end-user buyers. The markets may be smaller compared to Manila but more stable in terms of end user housing demand.
3 Diversified office tenancy mix to be led by non-BPOs
Offshore gambling has filled the void left by business process outsourcing comapnies (BPOs). With the Philippine Amusement and Gaming Corp. (Pagcor) issuing 51 Philippine Offshore Gaming Operators (Pogo) licenses thus far, requirements from Pogos have sprung across Metro Manila.
We see less office launches next year following the decline in BPO companies’ office space demand. Colliers expects traditional companies taking on a bigger role in 2018 in terms of space absorption.
4 Flexible workspace to accelerate
There are over 2.15 million sq.ft. of (available) flexible office space in Metro Manila. The profile of tenants varies from start-ups, to law firms, Fortune 500 companies and freelancers.
As mobility, connectivity and flexibility become the norm in working in the 21st century, occupier demands will also change sharply, requiring more flexible office spaces over the near to medium term.
The challenge for the developers is to adapt to the demands of the market to remain competitive in this growing office segment especially as international co-working brands enter the market. Outside Metro
Manila, growing hubs for flexible workspace are Iloilo, Bacolod, and Davao.
5 Growing popularity of e-commerce to drive warehousing, logistics demand
The warehousing and logistics market in Metro Manila is tight, operating at an average of 98 percent occupancy. Warehouses in the country’s capital have been dwindling as land values rise and demand for residential and commercial projects increase.
We see logistics and warehousing to be a major driver of Northern/Central Luzon economy over the medium term in light of the planned expansion of Clark airport and construction of Subic-Clark cargo railway.
Opportunities abound and are enticing developers to acquire warehousing and logistics businesses. Among the most aggressive are the SM Group and Davao-based businessman Dennis Uy of Udenna.
6 Industrial park developers head north of Luzon
Major developers are heading north of Manila. Recently, DoubleDragon acquired a 6.2-hectare lot in Luisita Industrial Park in Tarlac.
A proof of Northern and Central Luzon’s rising viability as an industrial hub is the Xu Liang Dragon Group’s commitment to develop a 3,000-ha mixed-use special economic zone in Pangasinan. Other industrial developments in Pampanga are Ayala’s 31-hectare industrial park in Alviera estate in Porac and Filinvest’s 100-hectare industrial estate in Clark Green City.
7 More townships outside Metro Manila
Colliers expects developers to continue pursuing satellite communities in and outside of Metro Manila. Townships offer a better value proposition (live-workplay-shop lifestyle) than standalone projects since they offer mixed-use developments.
We see developers pursuing more township projects in areas outside of Metro Manila such as Cavite, Laguna, Bulacan, Pampanga, Cebu, and Davao over the near to medium term as land values are being unlocked by an aggressive expansion of road networks.
8 More resort-oriented hotels across the country
We believe that the development of 3- and 4-star hotels in resort destinations will be more visible over the next two to three years. Colliers believes that among the most attractive locations for these developments are Cebu, Bacolod, Iloilo, Palawan, Davao, and Bohol.
New airport infrastructure is essential in further expanding both local and foreign tourism. Colliers believes that the expansion of international airports in major destinations such as Bohol, Bacolod, Iloilo, and Davao will allow foreign tourists to bypass Manila.
9 Continued growth of e-commerce and experiential retail
To attract more customers, we encourage malls to provide more lifestyle amenities and technology-driven customer experiences that generate a sense of destination.
Developers and retailers in the Philippines do not migrate totally to e-commerce but in fact use online shopping and social media platforms to complement their physical stores.
10 Leisure, industrial to drive Cebu property expansion
The completion of the Mactan-Cebu International Airport expansion project should further boost Cebu’s attractiveness as a tourist destination.
Cebu’s attractiveness as a tourist spot and growing competitiveness as an investment destination should support a 15 to 20 percent growth in tourist arrivals over the next 12 months. This should sustain hotel occupancy of between 65 percent and 70 percent across Metro Cebu over the next 12 months.
Demand for warehouses and container yard spaces may become more pronounced over the next 12 months.
We see industrial land values in the northern parts of Mandaue, Consolacion, and Lilo-an growing by at least a tenth annually over the next two to three years. Cebu remains as one of the most feasible industrial locations outside of Manila due to its strategic location and skilled manpower.