Philippines to lead ASEAN real estate market growth
The Philippines is expected to lead the Association of Southeast Asian Nations (ASEAN) real estate markets in terms of growth and development.
The island nation was able to sustain momentum in the real estate sector in Q1 2015, according to property consultancy CBRE Philippines, in a report on the Metro Manila market. CBRE observed that the property sector continued to grow, supported by low inflation, a promising business climate and higher government spending.
The business process outsourcing (BPO) sector is a significant contributor to the growth and robust nature of the office market, particularly the IT-BPO sector which registered an 18.7 per cent revenue increase in 2014 and breached the one-million mark in employment.
The BPO industry in the Philippines will continue to drive growth in the real estate market this year, according to a report by the Urban Land Institute (ULI) and PwC. The Emerging Trends in Real Estate Asia Pacific 2015 report ranked Manila as eighth among Asia Pacific (APAC) countries in investment and development prospects, higher than neighbors Singapore, Taipei and Bangkok.
“Strong economic growth and ongoing investment in the offshoring sector – both BPO and financial back office – continue to underpin Manila’s popularity,” said the report. It added that growth in the BPO sector has created a multiplier effect that has led to strong growth in the retail and housing sectors. Apparently, the growth of the BPO sector will continue to positively impact real estate, as it creates demand for more office space and development.
Fort Bonifacio in Taguig absorbed more than 5000 square meters of office space during the Q1 2014, while demand for office space increased in Ortigas, Pasig as BPO firms expanded in the area. BPO industry expansion also stimulated increased activity in the residential sector, apart from overseas remittances from the Filipino diaspora. Increasing residential uptake was also credited to the introduction of an increasing volume of affordable residential projects.
In the industrial sector, growth is increasingly driven by manufacturing firms expanding in the Philippines, in addition to lower input costs and cheaper labour. The retail segment of the Philippine real estate also benefited from the heightened purchasing power of Filipinos.
According to the CBRE, the trends captured in the commercial property retail sector is the expansion of 24/7 shops – particularly franchise properties like fast food chains, coffee shops and convenience stores. This is to cater to the demands of a growing middle class that has emerged from the Philippines.
“With a strong real estate market, the Philippines will not only be open to more opportunities but ultimately, lead the other ASEAN countries in terms of growth and development. There is no let-up in the growth of the property sector. The supply and demand across the office, residential, retail, and industrial markets remain positive, especially with the upcoming ASEAN integration”, said Rick Santos, chairman, founder and CEO of CBRE Philippines.
By Shiwen Yap - www.dealstreetasia.com
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