Property Boom Altering Manila Skyline

By Rosemarie Francisco (Reuters)

November 26, 2012, 5:42pm

The capital of the Philippines is in the throes of a property boom described as the best in two decades, reflecting the increasing confidence in an economy that only recently began shedding its image as one of the region’s basket cases.
Nowhere is it more obvious than at Bonifacio Global City, a commercial and residential property development on a portion of land carved out from Manila’s biggest army base.
Originally sold by a cash-strapped government in the mid-1990s, building only got underway in earnest during the last six years after Ayala Land Inc took ownership. Under the Spanish-Filipino business clan that runs Ayala, construction is now going at full tilt.
‘’Work here is 24 hours,’’ said Renel Reyes, an engineer and property manager overseeing a 30-storey tower due to be completed by the year-end.
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Soon to be home for Nickel Asia Corp and local conglomerate Aboitiz Equity Ventures Inc, NAC Tower is just one of several tower blocks under construction. As his own workers carried in sleek aluminum rails, Reyes said the state of the market was obvious to anyone who looked up.
‘’There are so many tower cranes, a good indicator of the construction boom right now.’’
Located near Makati, the main business district that grew up in the 1970s, Bonifacio is a project in progress, but rents at 800 peso per square metre ($19.5) are already catching up with its older, established, but saturated rival.
Though rents paid in Makati have recovered almost 30 percent in the last three years, they are still way below the peak of 1200 pesos/sqm ($29) paid before the global financial crisis hit in 2008, data from property manager and consultancy Jones Lang La Salle Leechiu (JLL) shows.
That makes renting in Manila’s business districts far cheaper than Hong Kong, Shanghai or Singapore. But then infrastructure remains a drawback, as anyone arriving at Manila’s tired, old airport quickly realises.
Still, as Bonifacio lures companies tired of Makati’s cramped spaces with its sprawling parks, luxury hotel chains and
Italian supercar makers have followed the money.
Lamborghini opened its first Philippine showroom, side by side with Ferrari, in Bonifacio, while Hyatt and Shangri La hotels are opening there soon.
Office space in most new buildings are snapped long before completion. At the NAC Tower, for example, only six floors remain un-let, but Reyes said they have potential takers.
Take up of new office space this year is set to hit a record 400,000 to 450,000 sqm, up as much as 25 percent from last year, according to Jones Lang and CBRE Philippines, another of the country’s biggest property manager and advisers.
‘’Pre-leasing is back,’’ said Rick Santos, chairman of CBRE.
‘’We are now experiencing the best real estate market in the Philippines in the last 20 years.’’
The primary driver of demand for office space comes from business process outsourcing (BPO) firms catering for European and American multinationals that want to cut costs.
With one of the region’s fastest growth rates, GDP grew 6.1 percent in the first half, the Philippines has shown resilience in the face of falling demand in the West and China, that other more export driven economies must envy.
Analysts say the Philippines could achieve its first investment grade sovereign debt credit rating in the next 12 months, about seven years after ending its debtor-nation status with the International Monetary Fund.