More Players Seen to Enter Affordable Home Segment

Tuesday, December 13, 2011

SUNDAY, 11 DECEMBER 2011 18:05 RIZAL RAOUL REYES / REPORTER

http://businessmirror.com.ph/home/companies/20504-more-players-seen-to-enter-affordable-home-segment

AFFORDABLE housing, also known as the middle-market residential condominium, will continue to grow in 2012 which will entice more players to enter the market, according to a major property management and consulting firm. 

In an e-mail interview with the BusinessMirror, Victor Asuncion, executive director of CB Richard Ellis (CBRE) Philippines, said affordable will continue to be appealing to a wider segment of buyers which will entice more developers to join the market specifically in the affordable residential condominium segment.

“The primary driver of the affordable housing segment is the growing middle class, particularly those employed by sunshine industries such as telecoms, food and real estate as well as the overseas Filipino workers (OFW)  population,” said Asuncion.

According to government statistics, there are around 8 million to 11 million overseas workers deployed in more than 50 countries. Furthermore, the Philippine Overseas Employment Administration reported that total remittances by OFWs are likely to exceed the P20.1-billion target set for 2011. From January to September this year, total remittances were already recorded at P14.76 billion.

Asuncion also pointed out many developers realize the potential of the affordable housing segment that entices new players to come in. “However, it will make the market highly competitive and we have to separate the men from the boys in the conduct of real-estate development,” said Asuncion.

Asuncion added that the affordable or middle market segment is already well defined. For instance, he said Ayala Land Inc. unit Amaia is focused to serving the horizontal market with its project in Calamba, Laguna for people who want to live in the suburbs.

“If you want affordable housing, you can have this but it will be outside Metro Manila. An example will be the Amaia housing project of Ayala Land in Calamba which is about 50 kilometers away from the Makati central business district.  However, if you want affordable vertical condominiums, then you can choose among the projects of Amaia Land which is also into affordable condominium development. DMCI Homes, Phinma Properties and New San Jose Builders [have projects that] are still within Metro Manila but only in peripheral areas,” said Asuncion.

Meanwhile, Asuncion said he vacancy rate is expected to be at a single-digit low given that there are limited new spaces ready for occupancy for business process outsourcing (BPO) tenants. 

He added the rates hikes will be on a case-to-case basis, depending on the business district location, although vacancy rates will remain low given the lack of new supply. 

Asuncion said additional supply is yet to be added in the second quarter upon the completion of the P7-billion, 33-story Zuellig Building.   

He expects the completion of Zuellig Building will trigger flight to quality given that existing Prime Grade A office in Makati City are at least 10 years old. 

“Given historical take in these business districts and the availability of ready for occupancy space, growth in BPO space development in these areas will be robust in 2012. BPO buildings within the three business districts have high precommitments; new buildings are already at almost full occupancy even before turnover,” said Asuncion.  

Meanwhile, Asuncion said leasing for Grade A and luxury residential condominiums will remain healthy since demand remains healthy due to the expansion in the BPO sector.