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MANILA, Philippines – All sectors under the real estate industry are seen to continue upward growth, according to investment management firm JLL in its preliminary Metro Manila Property Market Overview (PMO) report.
Sustaining this demand are business process outsourcing (BPO), online gaming, and other tech-driven companies, according to JLL.
The firm’s research and consultancy director Janlo de los Reyes on Thursday, April 11, said that despite the increasing real estate demand from BPO and online gaming firms, vacancy levels will remain healthy at 6%.
Also contributing to the demand are mainland Chinese investors, which are associated with offshore gaming. The increase of Chinese businesses in the country also drove up office and residential space demand. (READ: Finance department zeroes in on foreign online gambling workers)
“We could see interest still coming from mainland Chinese investors looking into investing 300 hectares, 500 hectares,” De Los Reyes told Rappler.
“Definitely, there is a big chunk of demand coming from China, but what we expect to see in the coming months, in the coming years, it’s going to diversify [to other industries]. We’re gonna see more industries from mainland China coming [into] the Philippines,” he added.
Despite the potential influx of Chinese businesses, JLL sees no signs of the real estate sector overheating anytime soon as the demand is “contained in select areas.”
“Some developers, they’re containing this demand from certain towers, certain buildings, or certain areas just to properly manage them (Chinese businesses), at the same time, to mitigate their risk,” De Los Reyes said.
All sectors growing
Aside from BPO and online gaming, JLL also saw flexible workspaces as one of the leading sources of office space demand in the 1st quarter of 2019. (READ: Megaworld-WeWork deal seen to draw more foreign firms to Philippines)
“The continuous domination of the millennial generation in the overall Philippine employment population will influence in the change on work culture, driving the popularity of flexible workspaces in the Philippines,” read JLL’s statement released on Thursday.
“This is seen to boost the demand for office spaces from flexible workspace providers with the millennial generation penetrating this type of work environment.”
A spillover of office space demand is also expected in Bacolod, Cagayan de Oro, Cebu, Clark, Davao, and Iloilo amid shrinking spaces in Metro Manila and economic growth in provinces due to the government’s Build, Build, Build program.
The report also showed that an additional 173,600 square meters (sqm) brought the existing supply of office spaces in Metro Manila to 8 million sqm. However, modest growth is expected in the coming months, based on the announced projects.
JLL added that the sustained demand for the residential sector is complemented by continuous project launches, especially with the opening of mid to luxury condominium units in the 1st quarter.
Expansion was also seen in the retail space, even outside Metro Manila. The firm credited this to the strong demand from foreign and local brands which had narrowed the vacancy rates to 3.7% in the 1st quarter.
Total stock for manufacturing and logistics industries ended the 1st quarter with 4,100 hectares in the areas of Cavite, Laguna, and Batangas despite slow proclamation of Philippine Economic Zone Authority-registered areas.
Growth outside Metro Manila
Noting the growth spreading outside Metro Manila, De Los Reyes said that the next areas investors should be on the lookout for are Clark, Cebu, and Davao. Clark was seen as the closest area for offices for relocation.
“In terms of Cebu, we’re seeing that there’s a lot of movement in the hotel market and also in the residential market, owing to the opening of the new [airport which] brought up demand for short-term and long-term stays,” he added.
JLL’s PMO report noted that home-sharing schemes such as Airbnb and foreign budget hotel operators are also poised to supply more rooms as the government rolls out tourism-centered initiatives.
Meanwhile, De Los Reyes said that a number of BPO companies flock to Davao as well. – Rappler.com