Demand for office space developments and residential condominiums will continue to drive the Philippine real estate sector through 2015, the domestic unit of global property consultant and brokerage firm Jones Lang LaSalle said in a briefing on Wednesday.
Jones Lang LaSalle Leechiu (JLLL) added that retail developments and upscale landed properties- referring to homes in upscale villages in Metro Manila-will also continue to be a safe bet in the long-term supported by the country’s growing middle-class.
The tourism sector, where the Philippines remains a laggard in the region, also presents new real estate opportunities although the current lack of facilities to support this industry could hinder demand, JLLL said.
For the office building segment, JLLL country head David Leechiu said business process outsourcing (BPO) locators will keep demand steady at about 300,000 square meters (sqm) per year. But Leechiu said those projections could be bumped up to 360,000 sqm in this year until 2013.
“The Philippines has become part of the anti-crisis solution for many multinational companies as they address costs,” he said. “It is an accepted market today for BPOs [ compared to] four or five years ago when there were doubts.”
Rising demand has also given way to increasing rental rates, which have recovered 42 percent since the 2008 global financial crisis, according to JLLL data. Still, Metro Manila remains the cheapest in the region for prime office space, with Hong Kong, Tokyo, Singapore and Mumbai regarded as the most expensive, the company's research showed.
Areas like Bonifacio Global City in Taguig and Makati City are expected to experience further growth in rental rates next year.
“We have had a very healthy rate of appreciation in a short time and there is no stopping this [increase],” Leechiu said.
The residential condominium sector is also showing continued signs of growth with the supply for high-end ( above P10 million) and mid-end ( P1.5 million to P10 million) units to grow by 107,300 units through 2015 versus 73,300 units added in the last 11 years.
Leechiu credited this to the country’s growing middle-class, buoyed by new money from BPOs and overseas Filipino workers. There also remain investment opportunities here, JLLL said, but for “upper mid-end” developments in locations like Bonifacio Global City and Makati, given intensifying competition.
Real estate developers should also look to tourism as the “next big thing”. At 3.5 million tourist arrivals in 2010, the country only attracted a little over a third of 1 percent of all international tourists versus China’s 55.67 million, Malaysia’s 24.5 million and 15.84 million for Thailand.
Leechiu said there is a need to build more “two-star and three-star” hotels in destinations outside Metro Manila. Quezon City is also in need of better quality hotels, he said.
“Demand should go up. The product will make the traffic come here,” he said, noting that relatively expensive hotel prices in Metro Manila could soften once competition increases.
IN PHOTO: Jones Lang La Salle (JLLL) Asia-Pacific CEO Alastair Hughes (left), in a huddle with country head David Leechiu during yesterday’s briefing on forces shaping the real estate sector in the Philippines and the Asia-Pacific region. (Roy Domingo)
