MANILA, Philippines – The year of the dragon could bring good fortune to the Philippine real estate industry, an industry consulting firm said.
In a press briefing on January 25, 2012, leading real estate services and advisory firm CB Richard Ellis (CBRE) projected that the office sector, led by global demand for business process outsourcing (BPO), and the residential market, especially in the middle market, would see strong demand in 2012.
Rick Santos, Chairman and CEO of CBRE, said the industry’s continued growth would remain the natural response to the tightening of economies in the West, which is increasing the need to cut costs by outsourcing non-core functions to allow more productivity in home offices.
The Philippines is in much better shape according to CBRE. The absolute value of remittances is increasing and that income is expected to fuel growth in real estate, especially in the residential market.
“As Europe and the US slows down, Manila speeds up,” Santos said.
Despite increasing rental rates in 2011, CBRE stressed that the Philippines still has one of the cheapest lease rates in Asia and will continue to attract those who need office space to feed the increased global outsourcing trend.
Makati office rental rates grew to P840.35 per square meter in 2011 from P779.81 in 2010. Quezon City, which has the cheapest lease rates among the business districts in Metro Manila, also saw an increase in rental rates from P491.73 in 2010 to P537.21 in 2011.
Vacancy rate remained below 5% since the second quarter of 2011, CBRE noted.
Despite politically motivated move in the US to punish companies sending jobs abroad, “Outsourcing is still going to be strong in the Philippines in the coming years,” noted Joey Radovan, CBRE vice chairman for global corporate services.
Clark in Pampanga is being eyed as the next big market for BPO in the country. “Watch out for the growth of outsourcing in Cebu in the South and Clark in the North,” said Rick Santos, CBRE chairman.
The residential sector, on the other hand, experienced a 29% growth to 57,979 units in 2011 from 44,811 units in 2010.
CBRE is eyeing strong demand in the middle-income segment because of the broad sector of young professionals and start-up families who are making their primary homes in urban centers, like Metro Manila, Metro Cebu and Davao. The trend of increasingly flexible payment schemes and lower interest rates from banks is seen as a positive development for this middle-market.
The Executive Director for CBRE Asset Services Group, Lui Matti said vertical developments will further maximize every square meter of land, copying trends that hit Hong Kong and Singapore earlier.
“The shift from horizontal style housing to the more practical condo type development, with pricing now suited to a much wider range of buyers, shows the progress we are making towards becoming a more competitive economy,” he said.
For units with a price range of P40,000 to P80,000 per square meter, take-up increased by 3% in 2011, according to Matti. Units priced from P80,000 to P100,000 per square meter, on the other hand, inched up 1% in 2011.
CBRE noted that a total of 105,722 units are expected to be turned over to buyers starting this 2012. “We see 2012 as another buy year for shoppers, with a wide choice of projects each with unique amenities, and access to the right kind of financing,” he added. –Rappler.com