THE Philippine property sector is in for another robust period as re-estate values are experiencing gargantuan increases across all sectors in 2019.
“We expect transaction values to keep climbing this year not only in the office market but also in the residential and industrial arenas,” said David Leechiu, CEO of Leechiu Property Consultants (LPC) in a press briefing on Monday in Makati City.
“We have seen the highest land value in Bonifacio Global City at P1.3 million per square meter and the highest condominium price at P540,000 per sq m in Shangri-La the Fort. Sustained demand amid limited supply of condominiums in Makati enabled prices to an all-time high of P533,000 per sq m due to a growing affluent market,” Leechiu added.
He said major growth is the mainland Chinese who composed the largest share of foreign buyers for investment purposes. With this development, developers might possibly start focusing on the Chinese market and tap Chinese developers as partners.
He added the country’s information-technology and business-process management (IT-BPM) will demand more space in Manila as well as in the regions “provided there is a continuous stream of Philippine Economic Zone Authority [Peza] accredited spaces. However, Leechiu pointed out there are only 216,000 sq m of Peza-accredited space against a forecast demand of 450,000 sq m from the industry.
“This is going to be the biggest hurdle for growth in the IT-BPM expansion,” he said.
Leechiu said there are only 29 buildings totaling 544,000 sq m of vacant office space under Peza application across Metro Manila. “LPC pleads for the government to approve more Peza zones in Metro Manila and across the Philippines. Quezon City has the largest supply of Peza-accredited space from now until 2023.
Metro Manila had the biggest share with 187,000 sq m or 92 percent. Meanwhile, regional districts have shown strong demand with Clark, Tarlac and Davao leading the provincial sites.
As of the first quarter of 2019, Leechiu said the IT-BPM industry led the Philippine office demand with 115,000 sq m or 56 percent of the first-quarter 2019 take-up followed by the offshore gaming industry with 36,000 sq m.
“Peza should establish complementary sites either inside or outside Manila or to address the deficit,” Leechiu said.
He said asking locators to go to the provinces won’t work because the labor is not sufficient and the absence of large areas for operations can handle huge requirements from overseas.
Leechiu said there is going to be resurgence in the IT-BPM industry because of the rise of hourly wages in the United States from $7 per hour to $15 per hour. Moreover, he said IT-BPM that have diversified in the past years have returned to the country for expansion.
In the office supply category, Leechiu said it will grow by 34 percent in the next five years. The fast level of developments outside Metro Manila is expected to add 1.23 million square kilometers to its current supply of 2.08 million.
“We expect Clark Global City to be the largest producer of office space outside Metro Manila in the next five years,” he said.
In the Metro Manila office supply market, LPC reported a 5.5-percent vacancy rate. Offices in the Bay Area and Alabang have the lowest current vacancy rate at 1 percent. LPC noted that Makati City and Bonifacio Global City will experience a low supply of buildings coming in by 2021.