According to Luis Enrique T. Mangosing, Metro Development Managers Inc. CEO, the local property sector has remained bullish for more than a decade now and its growth momentum should still be sustained over many years to come. “In fact, I think this year commercial developments will turn over more than half-a-million square meters of space, enough to meet local demand,” he told reporters at the Philippines Property Awards 2016 ceremonies in Makati City.
“If you compare it to Singapore, you’ll be lucky with a 10,000 sq m [set for] completion in the same year. So that’s how big the Philippine [real-estate] market is nowadays. And the developments are not concentrated [only] in Metro Manila anymore, [as] we do have satellite developments in Cebu, Bacolod, Iloilo, Davao. That’s the beauty about the Philippine real- estate industry, it's growing everywhere,” he added.
Mangosing also cited the strong activity in other property subsectors, like the office segment that is much in demand among business-process outsourcing (BPO) locators. “I’d like to think that more than 50 percent of the [office-space] demand is being driven by BPOs and call centers,” the top executive said.
As per the recent report of property consultant Pinnacle Real Estate Consulting Services Inc., the local office market has remained robust in the third quarter of this year on the back of strong demand, low vacancy and increasing rent rates.
Based on the company’s Market Insight Report for September 2015, office-space take-up in Metro Manila has continued to expand, with some 40,000 sq m already filled up by BPO companies the past three months.
Over a thousand firms now comprise the country’s BPO industry, employing over 1 million people as of end-2014.
Given the quick and massive absorption of office space, the overall vacancy rate at the central business districts (CBDs) in the metropolis is below 3 percent no matter the accelerated pace of supply.
The huge uptake on office space is because, compared to other markets in the region like India, Hong Kong and Indonesia, among others, the Philippines still offers the lowest office rental rates, it was said.
The Pinnacle research also revealed that rental rates in Makati City grew by approximately 1 percent quarter-on-quarter, with monthly charges ranging from P675 per sq m to P1,280 per sq m.
In other CBDs, both Ortigas and Alabang have average monthly rental fees of P650 a sq m, P870 a sq m in Bonifacio Global City, but a bit cheaper in Quezon City at only P625 per sq m.
Expected to expand with 1.3 million jobs and projected annual growth of 17 percent by 2016, the BPO industry demand for office space should continued to rise as more and more outsourcing companies increasingly look to set up shop not only in the metropolis but also in the so-called next-wave cities around the country.
As for the residential sector, Mangosing said there already are indications of surpluses in certain locations and categories, but that a substantial backlog exists in the low-cost housing portion of the industry. Pinnacle previously said the National Economic and Development Authority estimated the housing demand at more than 800,000 units a year, of which close to 400,000 is met. The remaining households represent demand from informal-settler families who cannot afford one.
Private real-estate developers typically target to carve a market share from the 400,000 annual demand for housing in the Philippines.
“The problem with low-cost housing is that it’s very dependent on long-term mortgages, which are provided by the government. So depending on how efficient the take-out system of the government, that drives the volume of production and sales,” he said.
Since the private sector cannot fund the low-income portion because the interest rates are socialized, ranging from 5 percent to 7 percent, the developers themselves do not participate.
Given this, Mangosing urged the government, through its housing agencies, to become efficient in terms of raising funds for socialized low-cost housing.
“The potential demand is there, but it’s the funding that is lacking,” he said.
It was noted the Housing and Urban Development Coordinating Council approved in June the adjustment of the so-called economic-housing loan ceiling to P1.7 million from P1.25 million.
This will give average-income earners living in highly urbanized cities a chance to avail of a higher value loan for housing.
Looking forward, Mangosing expects the growth areas of the local property market to come from the hospitality, retail and commercial-development sectors.
On the various developments now taking place overseas, Ensign Media CEO and Property Report Magazine Publisher Terry Blackburn said the Philippines is resilient enough as to be sufficiently shielded from China’s economic slowdown.
“In fact, during our Property Report Congress last week, we asked all of the speakers about this, and 90 percent said what’s happening in China now will have no impact on the property market here and in the region,” he said. “Unless there’s a major hiccup from outside of the country, I expect the industry to move forward,” Mangosing quickly added.
by Roderick Abad / http://www.businessmirror.com.ph