MANILA, Philippines - The funds sent home by overseas Filipino workers (OFW) and the booming business process outsourcing (BPO) industry remain the drivers of the Philippine real estate sector in 2013.
This positive outlook was complemented by healthy investment environment and low interest rates, a key factor in buying homes, especially by OFWs, shared Rick Santos, chairman and CEO of real estate advisory firm CBRE Philippines.
“It took 20 years to get the stars aligned but now we’re looking at sustained growth. We are now experiencing the best real estate market in the Philippines in the last 20 years,” said Santos during a yearend briefing on Tuesday, November 20.
Photo courtesy of CBRE
OFWs continue to drive demand. According to CBRE, foreign buying of property increased by 61% this year.
Vice President Jejomar Binay said in a recent Asian focused realty conference that the main reason OFWs go abroad is to buy a house here.
Santos cited the prevailing low interest rates as also key to robust demand for homes. The central bank has slashed interest rates to record lows to entice local consumer spending and investments to help shield the economy from the crisis crippling the rich countries.
The Philippines has the lowest interest rates and best financing schemes for home ownership today, noted Santos. Interest rates range from 5% to 11% for short- or long-term payment schemes.
“This has opened the opportunity for more Filipinos to become owners rather than renters,” stressed Santos.
This is reflected in the rising prices of property not just in Manila but in growing markets across the country.
According to Victor Asuncion, executive director of global research and consultancy at CBRE Philippines, Cebu residential condominium prices range between P80,000 to P110,000, reaching Makati and Ortigas prices. Other growing markets include Davao and Iloilo.
While demand for the high-end market will be sustained in 2013, developers will focus more on mid-income residential market segment within the P45,000 to P80,000 per/sqm range, reflecting the demand created from the growing population of families and young professionals, Santos said.
The growing demand for commercial spaces for BPOs is fueled by the Philippines' position as the top call center service provider in the world surpassing India in voice operations, and coming in second in non-voice operations.
According to Santos, Makati, Quezon City, Alabang and Fort Bonifacio have seen increasing demand for BPO buildings, with lease rates reaching the highest in Makati.
New supply between 2012 to 2015 will total 2.2 million square meters of new office space. Over two-thirds of the upcoming supply is located in Quezon City (24%) followed by Makati (18%), Mandaluyong (15%) and then Manila (12%).
Multiple credit rating upgrades, the support of the government, and a positive economic outlook are also encouraging international businesses to expand and relocate in the country.
“The Philippines is becoming the lifeboat of many US and European companies that need to outsource in order for their businesses to survive and actually preserve jobs back in the US and Europe," Santos said.
"We see a return and rapid expansion of US and European MNCs (multinational companies) to the Philippines. This is evident from global banks that are now relocating in the country for back office support,” he added. - Rappler.com