A LOOK AT PHILIPPINE REAL ESTATE’S 2014 PERFORMANCE
Global
property portal Lamudi looks back on an exciting year for Philippine real
estate
MANILA, THE PHILIPPINES, DECEMBER
18, 2014:
With China’s property market cooling after years of rapid growth, and
Singapore’s and Hong Kong’s housing markets expected to decline steadily, 2014
has seen real estate in the emerging markets come into focus. The Philippines,
in particular, performed (and is performing) well. Although GDP growth slowed
slightly, the country’s economy continues to outperform most of its neighbors.
“The
Philippine property sector’s 2014 performance is marked by exuberance in
certain segments traditionally overlooked,” said Lamudi Philippines managing
director Jacqueline van den Ende. “For example, Metro Manila’s commercial real
estate sector was and continues to be buoyant, bolstered by a healthy demand
from traditional office takers and the business process outsourcing (BPO)
industry.”
As
the year draws to a close, global real estate portal Lamudi looks back at an
eventful 12 months for the Philippines’ property sector.
1. BSP’s Preemptive Measures
Experts
say that there’s no real estate bubble in the Philippines, and this is largely
due to the fact that the country’s financial industry is cautious and well
regulated. In order to prevent the Philippines’ real estate market from
overheating, the government through the Bangkok SentralngPilipinas (BSP) has
been more involved in devising preemptive measures.
In
July, for instance, the BSP implemented a real estate stress test, which
mandates all commercial banks to provide adequate capital requirements in light
of their increasing exposure to real estate loans. This ensures that banks
would be capable of absorbing risks in the event of a shock. In addition, the
BSP is slated to release its real estate price index by 2015 to better monitor
prices, in an effort to avoid possible asset bubbles from forming.
2. Metro Manila Land Values
Breached the 1997 Peak
After
17 years, land values in Metro Manila breached the peak prices reached before
the onset of the 1997 Asian financial crisis. In a report published by Colliers
International, two parcels of land (both 1,600 sqm) in Fort Bonifacio owned by
the Government System Insurance Corporation (GSIS) were sold at a record
Php500,000 and Php458,000 per sqm. In nearby Makati City, real estate giant
Ayala Land bought the abandoned JAKA Tower along Ayala Avenue for an
undisclosed amount, which was speculated to be between Php500,000 and
Php560,000 per sqm.
These
events support a statement made recently by Jose Romarx Salas, head of research
at Pinnacle Real Estate Consulting, who observed that finding suitable and
large enough land in Metro Manila is the challenge right now for property
developers. This prompts them to bid high for limited supply of land in the
capital, which pushes up already skyrocketing prices.
3. Retail Boom
In
the first quarter of 2013, at least 170,000 sqm of new retail space entered the
market, and more than 100,000 sqm is expected to be completed before 2014 ends.
According to Jan Custodio, CBRE’s head of global research and consultancy, the
sustained level of spending is fueling the growth of the country’s retail
sector. New malls opened in 2014, which include Fisher Mall and Fairview
terraces in Quezon City, Century Mall in Makati, and The District and Unimart
Capitol Commons in Pasig. “Mall developers have been expanding to accommodate
the international brands coming in and the increase in spending of consumers in
the country,” Custodio said.
More
than 250 international establishments under coffee and restaurants, luxury and
business, and mid-range fashion retailers entered the Philippines in 2014. Swedish
retailer H&M unveiled its 3,000-sqm flagship store in SM Megamall in
mid-October, while four more H&M branches will open before the end of 2014.
Fashion
retailers are not the only ones expanding in the Philippines, but chains of
convenience stores as well. According to a report published in the Wall Street Journal, in 2012 only
7-Eleven and Mini Stop were fighting over Metro Manila’s most prime of retail
spots. Now there are seven, which include FamilyMart, All Day, Circle K,
Alfamart, and Lawson. The WSJ
forecast that the Philippines would see the number of convenience stores double
from around 2,000 today to 4,000 within four years.
4. Second-Tier Cities Hog the
Spotlight
The
Philippines is steadily becoming less Metro Manila-centric, and real estate
developments are starting to move outside the capital. For example, Iloilo in
the Visayas region is now being touted as one of the country’s next wave cities
and considered a critical center of economic growth. Property giant Megaworld
is now building a sprawling business here, which when completed will boast
business process outsourcing (BPO) offices, hotels, condominiums, and even a
convention center. Meanwhile, Century Properties will try to duplicate its
successful Azure project in San Fernando, Pampanga, while Ayala Land will build
a massive township in Porac in the same province.
5. Manila Bay Area to Rival
Macau’s Integrated Resorts
The
Philippine Amusement and Gaming Corp.’s (PAGCOR) Entertainment City complex, a
huge parcel of reclaimed land in Parañaque City, will see the opening of its
second integrated resort this year—the City of Dreams Manila. It followed
Solaire Resorts & Casino of Bloomberry Resorts Corp., which opened in 2013,
and will be followed by the opening of the Okada Group’s Manila Bay Resorts in
2015.
Also
this year, the second Resorts World property broke ground in the complex, with
the completion date expected in the fourth quarter of 2018. State-run PAGCOR,
in an article published in the Philippine
Daily Inquirer, is banking on the whole complex to hit $7 billion in gaming
revenue by 2019.
visit our website : Real Estate Manila
Comments