Amid soaring demand, Megaworld sees P20-B rental income by 2020

MANILA, Philippines – Megaworld Corporation is targetting P20 billion in rental income by 2020, as the developer owned by billionaire Andrew Tan aggressively beefs up its portfolio of leasing projects within its townships.

This means the urban township developer projects to more than double its P9-billion rental income in 2015.

To achieve this, Megaworld told the local bourse on Wednesday, February 1, that it will add close to 1 million square meters of leasable space in its portfolio.

“While we remain strong in our residential condominium business, it is also imperative for us to also fortify our rental portfolio,” Megaworld senior vice president Jericho Go said in the disclosure.

Megaworld said the additional rental inventory will be completed over the next 3 years, coming mostly from office, lifestyle malls, and commercial spaces to be built within its 22 townships and integrated lifestyle communities across the country.

Once completed, Megaworld’s total rental space inventory will jump to more than 2.5 million square meters (sqm).

“This direction will not only allow us to become a stronger and more sustainable company, but at the same time, we address the increasing demand for these spaces in our various townships,” Go said.

Of the 2.5 million-sqm leasable space by 2020, around 1.5 million sqm will come from office space, while 1 million sqm will be from malls and commercial centers.

“By the end of this year, we will breach the 1-million square meters of office space inventory, as we continue to experience a demand for office spaces,” Go said,

Megaworld currently has over 130 companies in its office rental portfolio, occupying around 850,000 sqm of offices space.

BPOs still fuel office space demand

This makes Megaworld the biggest lessor of office space in the Philippines.

Its office tenants include some of the world’s largest business process outsourcing (BPO) firms like Accenture, Wells Fargo, HP, IBM, and the United Health Group.

The Tan-led developer said areas for offices enjoy a “very high occupancy rate of 99%,” while pre-leasing rates of its office buildings that are still under construction stand at an average of 80%.

On the retail side, Megaworld said it plans to add 18 malls and commercial centers by 2020, covering close to 390,400 sqm of fresh retail space.

For 2017 alone, the company will complete 200,000 sqm of mall and retail space from different township projects. (READ: Alliance Global’s 2020 goal: Be the largest PH hotel developer)

According to Colliers International, continued demand for office space in the country will be supported by strong pre-leasing from both BPO and knowledge process outsourcing firms, as well as growing interest from offshore gaming companies.

Colliers has observed that pre-leasing is particularly strong in Fort Bonifacio. Offshore gaming companies occupied over 80,000 sqm of office space in the country last year.

In the last 3 months of 2016, Colliers said there was a surge in inquiries from offshore gaming firms, each with a minimum requirement of 10,000 sqm of office space.

Megaworld is part of Alliance Global Group Incorporated, the holding firm for Tan’s real estate, liquor, gaming, and quick-service restaurant businesses. – Rappler.com