THE year 2011 has been a success for the Philippine property sector across all sectors and stronger than 2010. In fact, CB Richard Ellis (CBRE) Philippines Chairman and Chief Executive Officer Rick Santos said there will be a continued show of confidence in 2012 in all sectors of the property industry.
“The success of 2010 was built on in 2011 and this continued show of confidence will be seen in 2012,” said Santos in an e-mail response to the BusinessMirror.
“The Philippine property industry is expected to continue its positive performance in 2012 given the upward momentum that continues to build up in the office sector relative to business-process outsourcing [BPO] office demand is strategic areas across the country, continued rise in overseas Filipino worker [OFW] remittances which is expected to reach $23 billion this year,” added Santos.
He noted that a major part of the disposable income of OFW households benefits the residential, retail, hospitality and leisure sectors of the Philippine property industry.
For instance, Santos said the industrial sector, particularly those that cater to the growing consumer market such as manufacturing and warehousing as well as logistics, is expected to fair well because of the upsurge in economic activities
Lui Matti, executive director for asset services group at CBRE Philippines, said in the same interview that 2011 was stronger than 2010 across all sectors. In the market, Matti said the commercial sector saw the entry of new major players in the BPO industry as well as the continued expansion of major firms.
He said the residential market also continued to enjoy good take-up, with developers focusing on the mid/affordable market segment. Earlier, CBRE said expatriate Filipinos comprised the bulk of the buyers in this segment. “Low interest rates and willingness of banks to lend to capable payers have made it easier for more people to own their first property in 2011,” said Matti.
Environment-friendly and sustainable construction have also emerged as major themes for 2011, with architects, engineers and developers seriously considering the US Leadership in Energy and Environmental Design (or LEED) and the Philippines’s Building for Ecologically Responsible Design (or BERDE) standards in the conceptualization, planning and construction of projects.
In its Philippine Property Market Monitor (November 2011 issue) posted on the company’s web site, Jones Lang Lasalle Leechiu reported that offshore and outsourcing(O&O) companies are looking to expand to next wave cities and urban areas. The company said total leasable floor area for sites in Manila, Tarlac and Davao has an approximate total of 21,000 square meters (sq m). Robinsons Land Corp. alone has started constructing two new BPO buildings in the Ortigas area, which will have around 80,000 sq m of leasable office space.
Based on the projection of a 20-percent growth rate from 2011-2016 by the Business Processing Association of the Philippines, Jones Lang Lasalle Leechiu said the prospect for the local O&O industry in the upcoming years is bright.
Victor Asuncion, executive director for global research and consultancy at CBRE Philippines, pointed out the drivers of the Philippine property industry for the last three years have always been and still are the BPO sector, OFW remittances and the tourism sector.
However, Asuncion said the gigantic collapse of the Lehman Brothers in September 2008 and the capital tightness in the US that lingered in 2009 slightly slowed down the growth of the industry. “However, given its strong demand fundamentals, the industry was able to shake off the negative influences of the sub-prime crisis in the US and resume its impeded growth,” he said. He is also confident the industry will continue to grow in 2012.
He said the affordable condominium market is one segment that has changed the landscape of housing development because it has attracted a lot of buyers from the middle-class and OFW households.
Designed for the middle-class segment, the affordable condominium is an ideal investment for young professionals working in the business districts of Metro Manila as well as start-up families or first-time buyers. This scenario is also being seen emerging in key urban centers such as Metro Cebu and Metro Davao.
As a result of the high demand for this product, Asuncion said major players such as Phinma Properties, DMCI Homes, New San Jose Builders and SM Development Corp. have established a niche in this market segment with more participants such as Camella Condo Homes of Vista Land and Amaia of Ayala Land.
At the rate property developers are putting up office, residential, retail and hospitality products, land bank are being depleted, Asuncion said there is a need to sustain business activity by finding and buying new developable land. “Thus, more hard asset acquisition and strategic business development by major players in the industry is expected going to in2012,” said Asuncion.
Asuncion said the high approval rating enjoyed by the Aquino administration is going to be a plus factor particularly in the property industry as it will continue to attract many investors starting in 2012.
Going into 2012, Santos said the trend to watch is the things that will happen in European economy and whether they will be forced to outsource to cut cost. “More large financial companies will be under increased pressure to save money and will thus outsource their banking support functions here,” he said.
Santos said there will also be a trend toward maintaining good property management of buildings to ensure the loyalty of tenants.
In 2012 Asuncion said he sees new property developments in secondary areas will take longer to sell or lease inventory relative to those situated in prime locations. “This will cause the total industry statistics such as vacancies and lease rates to be challenged,” he said.
For his part, Matti said the government should revise the implementing rules of the real-estate investment trust (REIT) to boost the market even further. Aside from the REIT, he said the government should continue to simplify the way to do business both in the national and local levels and keep the exchange rate within a competitive range.
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