Rise of property hot spots

The Philippines has seen, in recent years, the emergence of what were once considered as obscure districts, impoverished municipalities and lagging cities, but which are now deemed as viable destinations.

These areas are now being thrust into the spotlight for having attracted their fair share of investors and tourists, consequently being tagged as the Philippines’ property hot spots, rife with potentially lucrative opportunities for real estate firms.

Rise in economic activities

But what makes a locale worthy of being tagged as an emerging district, or as one of the next property hot spots?

“A location is considered an emerging city once we see business activities gaining traction. This, of course, is facilitated by an improving infrastructure network and the presence of a competent labor force that is able to handle the requirements of local and foreign investors,” explained Joey Roi Bondoc, research manager at Colliers International Philippines.

“The rise in economic activities then drive firms to respond to businesses’ needs. In real estate, developers respond by building more office space, constructing more residential projects, and developing other support facilities such as malls and hotels. This also buoys the demand for institutional facilities such as schools, hospitals, and outdoor recreational facilities for families,” he further said.

Bondoc told the Inquirer that there are several indicators that should be considered to see if an area is an emerging city or locale. For instance, one needs to consider the general macro-economic environment.

Here, one takes note of the number of businesses registered with the city or provincial governments; taxes generated by businesses in the area; the number of people they employ; presence of universal and rural banks, and the average amount deposited in every account, among others.

“We also need to consider if the local government officials provide adequate support to local and foreign businesses planning to open shop. The ease of registering a business is a crucial factor. Is it easier to obtain construction permits? The number of procedures and signatures required to open businesses should be reduced. Have local governments been responsive to new forms of businesses and investments such as fintech and offshore gaming,” Bondoc further said.

Other factors, according to Bondoc, include presence of institutional facilities; size of labor pool; quality of college graduates; internet connectivity, access to banks’ products and services, size of the market and innovation. The latter, he stressed, is important given the fast-evolving preferences of consumers and development of technologies and apps that further improve the delivery of goods and services in a locale.

“The presence of infrastructure is (also) important. There should be adequate farm-to-market roads, toll roads, bridges and expressways. These projects play a crucial role in providing a link between commuting employees and townships in emerging districts and could raise land and property values in emerging business hubs. In our opinion, the improvement of infrastructure connectivity in the countryside hinges on the government’s ‘Build, Build, Build’ infrastructure push,” Bondoc explained.

“Generally, the sustained growth of emerging locations will hinge on two major factors: infrastructure implementation and decentralization,” he added.

Some of the most promising property hotspots today include Bacolod, Iloilo, Metro Clark, Manila Bay, and the Cavite-Laguna-Batangas corridor.

Outsourcing hub

According to Bondoc, Bacolod City remains a preferred location for outsourcing operations. Its competitiveness was sustained by its improved ranking in the Tholons global survey for the most attractive outsourcing destinations. Several infrastructure projects are also in the pipeline, including the expansion and modernization of its airport, which should further contribute to Bacolod’s competitiveness.

However, Bondoc stressed the need for the city to scale up its talent pool to serve the changing needs of the outsourcing industry; and for property developers to also explore the possibility of developing plug-and-play offices as incoming knowledge process outsourcing (KPO) firms are in immediate need of buildings ready for occupancy and want to reduce their capital expenditures (capex).

Highly competitive

Investors, meanwhile, have constantly considered Iloilo as a potential location for investment given that it consistently ranks among the highly competitive cities and municipalities in the Philippines.

Two key initiatives, Bondoc noted, are expected to have a significant impact on the real estate landscape of Iloilo City, namely the 365-ha land reclamation project and a three-line skyrail project connecting key villages in the city.  These projects, coupled with the planned modernization of Iloilo airport, should further prop up the city’s attractiveness.

Improving connectivity

Bondoc noted that the Duterte administration’s goal of spreading business opportunities outside of the country’s capital is spilling over to major urban hubs such as Clark, a former American military facility transformed into a freeport zone that is located about 90 kilometers north of Manila.

Realizing the importance of connectivity in stimulating business activities in the area, the current administration has lined up a number of infrastructure projects that Colliers believes should play a significant role in transforming Metro Clark into the country’s next major economic corridor. These projects are seen to boost office, residential, retail, hotel and industrial demand in the country’s next major metropolis.

Reclaimed land

The lack of developable land in established business districts in Metro Manila have resulted in the growing popularity of reclaimed projects in the Manila Bay Area.

The viability of mixed-use projects in this area is strengthened by the mix of completed and proposed public infrastructure projects nearby, including Light Rail Transit 1 Cavite Extension, Sangley Airport, Metro Manila subway, Skyway and NAIA Expressway.

“The reclaimed business district has been attracting several outsourcing and multinational firms. Even government agencies are locating in the area. The entry of offshore gaming firms from China has raised the area’s attractiveness as a business district, resulting in tight office vacancy and rise in the prices of residential condominium projects,” Bondoc explained.

Integrated communities

The growing acceptance for condominium living and the dearth of available lots in Metro Manila led to the development of subdivisions in the outskirts of the metro, particularly in Cavite, Laguna and Batangas.

Cavite, previously seen as a suburban support area to Metro Manila, is now touted as a major property investment destination given the key infrastructure projects launched recently such as the LRT 1 extension, LRT 6, and Cavite-Laguna Expressway (CALAx). These projects should provide necessary access to growth areas in Cavite.

Primarily an industrial area, the CALABA (or Cavite-Laguna-Batangas) corridor has seen several property development projects over the past few years due to improved infrastructure connectivity and rise of other segments such as outsourcing. Even luxury residential developers in Manila have started to develop house and lot projects in the regionb due to the strong demand.

The corridor has become a hub for the development of integrated communities and this should result in the establishment of major business districts south of Metro Manila over the next five to 10 years.