11 ‘hurrays!’ for Philippine property in 2011
Despite the lower-than-expected economic growth for the Philippine economy in 2011, some sectors posted promising growth this year, particularly the property sector.
Just recently, Paul Vincent Chua of global real estate services Colliers International said there have been positive points about the city of Manila as a property investment option, particularly the lower rental rates compared with other Asia-Pacific countries. Last Saturday, property analyst Enrique M. Soriano said this year saw the “aggressive construction frenzy in the mid-income condo segment representing 80 percent of all residential developments in 2011.”
During the first quarter of the year, attractive financing schemes boosted the housing sector, among others. Inquirer (Business) came out with a report that taking out a loan for a home (or a car) has become easier than ever, with some of the lowest interest rates and flexible payment terms. Some banks offered loan approvals in 24 hours or less, and large discounts to reward prompt payments.
Other encouraging news from Colliers came out recently, such as the increased demand for office spaces in the Makati, Bonifacio Global City and Ortigas central business districts compared to 2010, and the “arrival” of growth centers like Eastwood City and Bonifacio Global City.
Over at CB Richard Ellis Philippines, the real estate advisory firm shared its own good news for 2011, two of the most “heartwarming” being the Philippines dubbed the best outsourcing destination in Asia, and the City of Manila as generating one of the highest office yields in Asia.
The CBRE study compared 16 central business districts across Asia, and those of the Philippines came out as charging the third-cheapest lease rates at US$19.1 per square foot/per annum, next to Jakarta’s $16.3 and New Delhi’s $12.7. This ranking came about despite increasing office lease rates in Metro Manila and declining vacancy rates in 2011. The other CBDs in the study are Tokyo, Singapore, Hong Kong, Mumbai, Beijing, Shanghai, Seoul, Taipei, Ho Chi Minh, Hanoi, Gunagzhou, Kuala Lumpur and Bangkok.
Victor Asuncion, executive director for global research and consultancy of CBRE Philippines, shared his own 11 property news in 2011 that would encourage us to see the Philippines as a “glass half full.”
1.) A record year for office takeups. 2011 is turning out to be a record year for office takeups, which is now estimated at 300,000 to 400,000 square meters.
2.) Year of the branded hotels. Hospitality developments aimed at the rising office and business community population have attracted branded hotel projects such as Shangri-La at BGC, Grand Hyatt and Fairmont Hotel to establish their own hotels here.
3.) Serviced apartments on the rise, too. Investments for, and the development of, serviced apartments has started in earnest, as business travelers such as business process outsourcing trainers and consultants are streaming in for the medium term—the main clientele of serviced apartments.
4.) Cheaper alternative for foreign carriers. Expansion as a result of a liberalized airline industry has enabled more foreign carriers, such as Air Asia, to provide cheaper air transport alternatives to millions of inbound and outbound travelers.
5.) Retail projects go nationwide. They’re not just confined to urban centers. Supermarkets, “hypermarkets,” malls and other big-ticket commercial establishments that focus on retail are now being put up across the country, with no less than property heavyweights such as Ayala Land, SM Prime, Robinsons Retail, Puregold PriceClub, Rustans and Waltermart behind these projects.
6.) Increased consumer spending. People are spending more—for home, communication and personal items, and especially for food. This literal hunger fuels the expansion of fast-food chains, retail kiosks, as well as beverage shops specializing in coffee, milk tea and frozen yogurt, to name a few.
7.) Vertical communities on the rise. Young urban dwellers as well as start-up families now tend to look more at the option of living in middle-income vertical communities (such as condominiums) in Metro Manila that are in close proximity to the business districts.
8.) That closer to REIT. The Bureau of Internal Revenue has released the Implementing Rules and Regulations for the Real Estate Investment Trust Act (REIT Law) of 2009. This has been considered a step closer to the listing of the first Philippine REIT company at the Philippine Stock Exchange, subject to the acceptance of the stakeholders.
9.) New hotels for tourists. If you build it, they will book. Increased confidence in the business of tourism has encouraged new hotel developments in key tourist destinations such as Boracay, Cebu, Davao, Cagayan de Oro, Palawan, Clark and Subic. Their efforts are now being rewarded as foreign and domestic tourist arrivals are increasing.
10.) The new destination for medical tourism. Foreign investments in the country’s medical facilities bode well for the emergence of the Philippines as a major medical tourism destination. Upgrading and expansion of tertiary hospitals provide options and alternatives to medical tourists as well as retirees—be they balikbayans or foreigners.
11.) Bay area developments. The best place in Metro Manila to see the setting sun may also be the ideal place to witness the reemergence of Manila’s economy. Bay Area developments have been a blur, aimed primarily at Asia’s gaming and gambling scene—a guaranteed index of economic growth. The Pagcor City and Belle Grande Casino Resorts Manila will soon be operational.
