The country’s gross domestic product (GDP) grew by 5.2% during the first half of the year based on the latest Philippine Statistics Authority (PSA) data. This is below the 6%-target, and underspending by the government is the usual punching bag especially now that national elections are looming. But government spending is expected to accelerate due to the number of approved, and ongoing infrastructure projects.
Real estate developers and players are banking on more sales by the end of the year, and are planning to take advantage of the increased spending during the election season.
For top players in industry, wait-and-see is not the way to go. Armed with double-digit earnings, supported by liquid financial market, and incisive analysis of the different real state markets and segments, they are going for gold. The Ayala Land Group is building township projects in 25 additional cities. One of these is Alviera, a 1,100-hectare large-scale master-planned development, in Porac, Pampanga.
The Ayala Group is likewise redefining the Balitawak-Quezon City landscape and skyline with the development of an 11- hectare property. The first phase includes a two-hectare shopping complex and a 250-bed hospital specializing in cardiology and cancer due for completion in the same year. It is also developing “Vermosa”, a 700-hectare area that spans the Cities of Dasmariñas and Imus in Cavite.
Micro cities, build them and they will come
The SM Group is building “micro cities” around its shopping malls. This includes apartments, offices and hotels to maximize the value of its property holdings. At least fifteen of the SM shopping malls are on large land that can accommodate high- density and mixed-used developments. SM Group intends to pour Php 100 billion of investments in the sprawling 600-hectares Manila Bay reclamation that would turn the property into a master-planned, integrated and mixed- use community.
SM Group also plans to increase its current 52 shopping malls to 75 by 2018. Recurring income from its malls is a main source of profitability of SM Group. It almost doubled its first-half net income from Php 9.8 billion last year to Php 18.7 billion this year. Recurring income accounts for Php 11.2 billion according to a recent study.
The projects for the rest of the year include opening three more malls, 12,000 to 15,000 residential units from subsidiary SM Development Corp., the opening of Conrad Manila at the Mall of Asia Complex as well as the Park Inn by Radisson Clark in Pampanga, and the start of construction of residential projects in Chengdu, China.
Retail mall race, and townships
The Megaworld Group has been busy with its five new townships all over the country. Recently, the group announced its intention of building 20 malls in the next five year. While Megaworld has been successful with its sales, mall operation spells recurring income. Thus, the group is joining the retail mall race.
The Vista Land Group already unveiled 27 projects in the previous months that may rake in Php 20.7 billion of sales. It intends to launch more projects before the year ends at an estimated sales value of Php 15 billion. More importantly, the Group has been beefing up its AllDay and AllHome retail platforms to drive recurring income. Vista Land is also building office spaces presumably to get a slice of the BPO market.
DMCI and Rockwell Groups are also beefing up their residential projects. DMCI is allotting Php 60 billion for its 12 projects next year. Rockwell is developing a township project in Iloilo. It recently launched The Vantage at Kapitolyo in Pasig City and the East Bay Residences in Muntinlupa City.
Bullish office market
The BPO industry is expected to generate US$ 20 billion by 2016, according to the Information Technology and Business Processing Association of the Philippines (IBPAP), The World Bank is even estimating a total revenue of US$ 50 billion from the BPO industry by 2020, according to a September study. Major players are already talking about moving up in the value chain.
Whatever the level of growth, the BPO industry is currently filling up office buildings even with the faster pace of new supply. Pinnacle Research monitored a total take up of approximately 40,000 sqm of office space that had been filled up by BPO companies in the past three months.
Residential market on upswing
Delivery of new residential condominium units are expected for the rest of 2015. Approximately 5,500 units are expected to be completed in the major business districts. These upcoming projects include Park Terraces Tower in In Makati CBD; West Tower, Meranti Tower and Sequoia Tower in in Bonifacio Global City; and One Shangri-La Place North Tower in Ortigas Center. Real estate developers are typically motivated to turnover units for them to collect the full payment and realize their profits.
Top players are not shy with their new launches with SMDC leading the way. The SM Group launched projects such as SMDC’s Trees Residences, Grass Residences and Shore Residences 2 with a projected total of more than 9,000 units. DMCI introduced its Asteria and Ivorywood projects, while Ortigas & Company launched “The Maven”, third tower of its Capitol Commons project in Pasig. The Ayala Land Group has consistently packaged its residential projects with mixed used and township developments.
To some, these figures may appear to be high. Based on the previous Pinnacle Report, the National Economic and Development Authority (NEDA) estimated the housing need is over 800,000 per annum; of this, close to 400,000 households annually can afford to buy housing units while the remaining households are mainly from the informal settler families. The private real estate developers typically target to carve a market share from this 400,000 per annum demand for housing all over the Philippines.
The Philippine real estate industry, and the economy in general, are moving forward at a steady pace as the nation gears up for a colourful campaign leading to the national polls in May, 2016.
Real estate developers and property players are banking on more sales by the end of the year, and are planning to take advantage of increased spending as a plethora of local politicians jockey for position during the election season.
Power of recurring income
The retail market with its various platforms is aggressively being pursued by top developers, because of its power of recurring income. While residential sales are generally brisk, once a project is fully sold out, a developer would have to do it all over again for another project in a different location. Unlike a strategically located shopping mall, it would provide steady annual net income.
The SM Group has a total net income of Php 18.7 billion for the first half of the year, and almost 60% comes from recurring income. This is the power of 52 SM Stores, 41 SM Supermarkets, 43 SM Hypermarkets, 127 Savemore stores and 27 WalterMart stores.
Ayala Land Inc. (ALI) is planning to open at least five new shopping malls in the next few years in line with its goal to earn a net income of Php 40 billion by 2020. It also plans to develop the nine-hectare mixed-use complex in Parañaque City with an anchor shopping mall. The Ayala Land Group earlier secured a 45-year lease for the 9.2-hectare property from the Wenceslao group, the owner of the Aseana Business Park complex, for the project.
COSCO Capital Inc., the listed company of Puregold’s Lucio Co, recently acquired RFC mall along Alabang Zapote in Las Piñas City. RFC has a total lot area of about 7,600 sqm and a gross floor area of about 23,000 sqm. The acquisition will add to the Group’s existing 35 stores with a total GFA of 343,000 sqm. Cosco/Puregold Group is planning to open eight stores in the next three years.
The Megaworld Group is joining the race with its plan of putting up 20 malls in the next five years. The Vista Land Group is integrating its retail platforms with its housing projects.
Another player that is making its presence felt is the Cebu-based Gaisano-owned Metro Retail Stores Group, Inc. (MRSGI). It recently opened its 20th branch Luzon, located in Calamba, Laguna. The Gaisano Group has grown its hypermarket portfolio to 12 stores in just three years. In total, it has 46 stores in key cities around the Philippines.
A little bit of a flutter
Hotels with casinos are sprouting up, even with the tight regulation of the Philippine Amusement and Gaming Corporation (PAGCOR).
The Ayala Land Group plans to invest as much as Php 30 billion in the next five years to put up Seda hotels across the country. It is even considering bringing the Seda brand broad. The Ayala group currently has four Seda hotels located in Bonifacio Global City, Cagayan de Oro City, Davao City and Sta. Rosa, Laguna.
Robinsons Land Group is another veteran in hotel development. While it has foreign partners running the Crowne Plaza and Holiday Inn, it has been steadily increasing its budget hotel--- Go Hotel. At present, it is operating nine hotels and is gearing up for its 10th location, probably in Davao. The nine sites are in: Bacolod, Butuan, Dumaguete, Iloilo, EDSA-Mandaluyong, Ortigas Center, Otis-Manila, Puerto Princesa and Tacloban.
To boost hotel development, the Department of Tourism (DOT) is motivating developers by endorsing for incentives a total of over Php 12 billion worth of tourism projects with the Board of Investments (BOI) and the Philippine Economic Zone Authority (PEZA). DOT identified nine hotels that will add 651 rooms to the industry.
The Philippine Economic Zone Authority (PEZA) has 316 operating economic zones under its supervision, hosting approximately 3,500 companies. Apart from these ecozones, the Clark Special Economic Zone (CLARK) and the Subic Bay Freeport Zone (SUBIC) have offered thousands of hectares to manufacturers in the past. In recent months, even with the sprawling CLARK and SUBIC, vacancy of industrial space is less than 200 hectares.
A number of foreign manufacturers have been looking for suitable industrial properties. PEZA intends to expand its Mactan Cebu International Airport (MCIA) by at least 30 hectares. The Bases Conversion and Development Authority (BCDA) intended to privatize the 200-hectare Clark Green City by way of joint venture, but the public bidding failed to enticed investors. While the government is going through its usual process of land development, supply of suitable industrial space is expected to tighten.
By The Standard | http://manilastandardtoday.com