THE year 2018 saw a strong performance of the real-estate industry particularly the office segment with an increase of 22 percent in actual transactions, 1.1 million square meters from 875,000 sq m in 2017—the highest recorded take up in Philippine history.
“I always say that the biggest beneficiary of a good economy is the property market. In 2018, while the country’s gross domestic product [GDP] growth of 6.4 percent was below the forecast of 6.7 percent as at Q3 [third quarter] 2018, the Philippines was still the third fastest-growing economy in Asia,” Pronove Tai International Property Consultants’s CEO Monique Pronove said at their media briefing held recently at their office in Makati City.
According to her, information-technology and business-process management (IT-BPM) remains a top demand driver, accounting for 490,000 sq m or 46-percent share of the total leasing transaction, higher than its take up of just 378,000 sq m last year.
At 312,000 sq m or a 67 percent higher than 2017 transactions, traditional offices had the second strong showing.
Philippine Offshore Gaming Operators (Pogo) came in third at 229,000 sq m, a slight decline from last year because of lack of space in their preferred locations.
Flexible workspaces became the fourth demand driver posting a significant growth of 258 percent from 10,000 sq m in 2017 to 37,000 sq m in 2018.
With continued construction activities, 32 new buildings were completed last year with a total office supply of 845,000 sq m—growing the stock by 9 percent year-on-year (YoY).
As of December 31, 2018, the Metro Manila office market has a total stock of 10.6 million sq m.
The City of Makati continues to be the largest office district at 32-percent share or 3.4 million sq m, followed by Taguig City at 21 percent, and Ortigas Center at 16 percent.
“Taguig City delivered the highest supply in the last four years at an annual average of 280,000 sq m,” she said.
Because of strong demand, an overall unhealthy vacancy level of 4 percent in the metropolis was apparent.
In fact, of the seven office districts, only Taguig City at 7 percent had a considerably healthy vacancy level (5 percent to 7 percent).
“Taguig City is certainly inching its way closer to Makati as it continues to build more,” the top executive noted.
Muntinlupa City recorded a 3 percent vacancy, and 1 percent for both Makati City and Ortigas Center.
The Bay Area, however, booked the tightest vacancy at 0.4 percent on the back of strong Pogo takeup.
Meanwhile, Quezon City and Mandaluyong City continued to register high vacancy at 13 percent and 10 percent, respectively.
“We would like to draw attention to Quezon City which ended 2018 with the highest vacancy,” Pronove said. “In 2019, Quezon City is slated to deliver the highest supply of 343,000 sq m of new office buildings developed largely by SM, Ayala, Eton and Araneta Group. As such, we see rents and capital values in the district to be pressured,” she added.
In terms of leasing, the Bay Area was the “best performer” being the lone business district that has a double digit rental growth of 19 percent YoY.
“Bay Area developers were a case of being at the right place, at the right time, opening up to Pogo quickly,” Pronove said.
The cities of Taguig and Makati registered 7 percent and 8 percent, accordingly.
Founded in 2002 by principals with a combined 40 years of experience in the Philippine and Asian real estate, Pronove Tai has been providing its expertise and quality services that include research and consultancy, landlord and tenant representation, property sales and purchasing, and property portfolio management for the past 15 years.
Throughout this time, it has catered to the real estate needs of government agencies, diplomatic missions, multinational, foreign and local organizations.
To date, the company has had P13 billion worth of transactions in various market segments, such as office, retail, industrial and petrol with over 1.2 million sq m rentable space transacted.
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