PH real estate grows 8.9% in Q3
MANILA, Philippines – Output growth for real estate, renting, and business activities grew by 8.9% year-on-year, real estate advisory and services firm CBRE Philippines reported.
The real estate market is the third biggest contributor to gross domestic products (GDP) points after trade and repair of motor vehicles, motorcycles, personal and household goods, and the manufacturing sector.
Factors that continue to encourage investments in Philippine real estate include aggressive efforts to improve public infrastructure, political stability, benign inflation which has tempered to 4.4%, and low interest rates.
The Asociation of Southeast Asian Nations (ASEAN) integration is likewise expected to heighten investor interest as foreign companies expand their market reach, CBRE Philippines said.
“The continuous transformation of cities into business landscapes will only strengthen the position of the country as an investment destination in the coming years,” said Rick Santos, president, CEO, and chairman of CBRE Philippines.
Vibrant office sector
The office sector continues to perform strongly this quarter, as commitments from offshoring and outsourcing (O&O) companies boost performance.
Investors from this sector and the business process outsourcing (BPO) industry, will continue to bank on the country’s cost efficiency and skilled labor force, CBRE Philippines said.
Vacancy rates among central business districts (CBDs) dropped, with the exception of Quezon City, which increased to 0.93% from the previous quarter’s 0.07%.
Prime office buildings in Makati are leased out, with overall vacancy dropping to 0.58% from 1.58% the previous quarter.
In Bonifacio Global City, vacancy dropped to 3.5% from last quarter’s 3.78%, while vacancy is now at 5.63% from 8.75% in the Ortigas commercial business district (CBD).
Alabang registered a drop of 0.9% from 4.37%, while Pasay City has a vacancy rate of 2.04%.
Township developments are also making the industry more upbeat. These projects can be seen across central business districts – Bayshore in Pasay; City Gate in Makati; Uptown Bonifacio, McKinley West, and Arca South in Taguig; Woodside City and Capitol Commons in Pasig; and Vertis North in Quezon City.
“The diversity of these developments is giving investors a more convenient and creative way to maximize each area,” CBRE Philippines said.
From high-end to mid-market boost
The upbeat economy fares well for luxury, high-end, affordable, and mid-market condominiums.
“Demand for these developments overpowered fears of a property bubble in the sector,” CBRE Philippine said.
The increasing expatriate community in the country and families of Filipinos working abroad drives this demand, with 40% of condominium sales activities catering to foreigners and 60% to Filipinos, CBRE Philippines added.
Meanwhile, the growth and expansion of the manufacturing and automotive industry drives optimism in the industrial sector, as investors from Germany, Japan, and Korea are currently making their mark in the country.
“The conducive business environment – the robust macroeconomic indicators, competitive labor resources, stabilizing political climate, and the different incentives laid by the Philippine Economic Zone Authority (PEZA) – encourages more locators to set shop in the Philippines,” CBRE Philippines said.
As more investors see the rosy side of the industrial sector, several developers such as Vista Land and Ayala Land are keen on putting up developments in areas outside Metro Manila.
More investment commitments are also seen to materialize in the coming months, further driving down the vacancy rates in industrial developments.
“As industrial developments increase, inclusive growth for the entire sector can be expected,” CBRE Philippines said.
On the retail side, global retailers became operational during this quarter. Intensifying competition among convenience stores also attests to the brisk consumption in the country, which in turn fuels the robust performance of the sector.
The bullish performance of the real estate industry in the third quarter is expected to continue through the end of the year, CBRE Philippines said.
“As long as this performance continues, and even improves, we can only see nothing but great developments in real estate especially with the ASEAN integration coming up,” shared Santos. – Rappler.com
Makati City image via ShutterStock