THE continued growth of the local real-estate sector has, indeed, established the country as one of the region’s most viable areas for long-term investments from across a vast market of consumers and developers, alike.
Just recently, a market study cited Manila as one of Asia-Pacific’s top five real-estate investment destinations—only strengthening the case of the Philippines as one of the region’s most sought-after property hotspots. A joint industry report entitled “Emerging Trends in Real Estate Asia Pacific 2014,” published by the Urban Land Institute (ULI) and PricewaterhouseCoopers (PwC), documented the rise of Manila unto the top of the competition, jumping from 12th spot last year to finish at number four this year. The study was compiled based from the insights provided by 250 of the region’s most influential personalities in the real-estate industry.
“It is a good niche play—it won’t register on the radar for a lot of institutional investors; it is just too small and too accident-prone,” the report said, referring to the series of unfortunate events that rocked the country back in 2013, among these were the unending pork-barrel controversy, the Zamboanga standoff, the 7.2-magnitude earthquake that rocked parts of Cebu and Bohol in the Visayas, and the devastation left by Supertyphoon Yolanda late last year. “But for people who are prepared to get in there and spend time and understand the market and the drivers, there is good value there.”
Numbers tell the story
One big factor that contributed to the rise of the Philippines, as mentioned in my previous entries here and in the ULI-PwC report, as well, was the continued boom in the office property segment of the local real-estate sector. In Metro Manila alone, there has been a total of close to four million square feet of prime office space. Even with this small chunk of available resource, the Philippines was even able to challenge Tokyo—which has a massive 400 million to 450 million square feet of office space in total—in terms of the number and quality of office space locators. This was because multinational companies, particularly those in the business-process outsourcing (BPO) sector, were attracted to the huge potential of doing business in the Philippines, primarily due to the country’s strong economic showing in the past two years.
Other elements that have contributed to this are the growing success of the local BPO sector, marked improvement in transparency and good governance, a young work-force demographic, and the large number of expatriate nationals from multinational companies who are continuously on the lookout for business opportunities here.
“Manila is a favorite for the office sector as it was for residential, and for many of the same reasons: an influx of foreign companies has arrived on the market, supporting already buoyant sentiment in a strong economy. Manila also offers the highest prime office yields in Asia, averaging about 10 percent,” the report added. In the survey, the Philippines also came out as a top pick in the retail real-estate category.
Creating a favorable reputation
“While the Philippines has long suffered from a reputation for lack of transparency, a significant number of executives interviewed for this year’s report were more upbeat about the current political environment, naming the country as their preferred choice among similar Asian markets,” the report cited.
This encouraging development now puts the value of priming and branding on the spotlight. Local developers and investors have done a terrific job in their quest to earn a chunk of the niche markets they cater to. Tourism stakeholders, in part, have also played a very instrumental role in building an image of a business- and investment-friendly Philippines, what with the emergence of leisure properties aimed at attracting vacationing tourists and expats, particularly in the Visayas region.
With the Philippine government continuing to exert effort in working with its partners from the local government units and the private sector to achieve all-inclusive growth from all frontiers, we can now clearly see the local property sector enjoying the rewards of having an investment-friendly reputation.
Truly, it will not make for a sound business advice for real-estate developers and stakeholders to miss out being part of a growing Philippine property sector by choosing to do business elsewhere.
In Photo: One of the fastest-growing real-estate sectors in the country.
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