The Philippines recorded the fastest economic growth in Southeast Asia in 2023, driven largely by personal consumption and remittances from Filipinos working abroad.
Moving forward however, we hope to see a more diverse group of demand drivers, especially gross fixed capital formation as represented by foreign direct investments, as well as public and private sector infrastructure investments. But to achieve this and for these gains to redound to the property sector, we need to see more drastic and radical changes to our economic structure.
Game-changing infrastructure
We are optimistic that this pledge to spend more on public projects will result in the development and rehabilitation of more bridges, expressways, and railways. Just imagine the tremendous impact the Metro Manila subway will have on land and property prices around the proposed stations—on top of the improved connectivity and ease of access from northern Metro Manila area to the Ninoy Aquino International Airport (NAIA).
With a daily capacity of more than 520,000 passengers, the Metro Manila subway will reduce travel time from Valenzuela to NAIA Terminal 3 from an hour and 30 minutes to less than 40 minutes. Recent news about it being operational in 2029 definitely excites throngs of commuters and businessmen.
Aside from potentially raising land and property values, this project will also play an important role in gentrifying certain portions of the capital region. Another possibility is the development of more micro townships especially in northern Metro Manila area. This massive project will definitely be a game-changer.
Meanwhile, the New Manila International Airport in Bulacan is another big-ticket project that will have significant multiplier effects to Central Luzon’s economy once completed. This should make Bulacan a feasible location for expansive mixed-use projects and raise the province’s stature as an alternative office, residential, leisure, and industrial destination outside of the Philippine capital. We already see major developers aggressively landbanking and developing in Bulacan as they intend to cash in on the project’s completion.
Another game-changer is the rehabilitation of NAIA. The doubling of its capacity to 62 million a year from the current 31 million should enable the country to attract more tourists. Again, this is crucial for the rebounding tourism sector with the Philippines, which aims to attract 12 million international visitors in 2028.
The North-South Commuter Railway (NSCR) is another important infrastructure likely to have humongous impact on the Philippine property market. The project, which will cover 147 km, will extend from Clark in Pampanga to Calamba in Laguna.
There are even proposals to extend it further down south to the Bicol region. The daily capacity is about 800,000 passengers daily. Complementing this with a cargo railway will definitely be a game-changer for the logistics market. This should present an opportunity for property firms planning to maximize the country’s thriving logistics sector.
The Philippines on foreign investors’ radar
Previous infrastructure allocation was relatively measly. From 2010 to 2016, for instance, the Philippine government allocated less than 3 percent of its gross domestic product (GDP) on infrastructure. This was way below the World Bank-recommended allocation of between 5 percent and 6 percent.
Infrastructure spending started to increase during the Duterte administration, and the current administration has committed to ramp up infrastructure development across the Philippines’ more than 7,640 islands. This is definitely a good news for an archipelagic country where connectivity is of utmost importance, and where quality infrastructure network is crucial in sustaining the country’s competitiveness and in lowering the cost of doing business.
These are important prerequisites in attracting more foreign direct investments and in enticing multinationals to invest billions of dollars in the Philippines.
Postpandemic, the Philippines is starting to establish itself as an attractive investment destination in the region. We continue to see more foreign property firms partnering with local developers in building several office, residential, retail, even township projects. The international partnerships will make the property landscape in the Philippines more competitive.
Overall, more local and foreign brands should result in greater competition, which should compel developers to offer more innovative projects and this should ultimately benefit Filipino property investors and end-users. This interest from foreign players will only be sustained if we continue to remain headstrong in chasing after and capitalizing on property game-changers.
Postpandemic, the Philippines is starting to establish itself as an attractive investment destination in the region