Upbeat property sector

The Philippine office sector is expected to be stronger this year, with POGOs growing throughout the term of the current administration, traditional companies expanding with the growing economy, strong pre-leasing activity, and improved demand from business process outsourcing (BPO) companies brought about by the faster pace of building proclamations by the Philippine Economic Zone Authority (PEZA).

In a just released report, global real estate services company Colliers International noted that today, the office sector is better positioned compared to a year ago with the late 2017 surge of PEZA building proclamations and a well-establishment government with clear economic policies and relatively stable relations with countries like the US, Japan and China, which should keep investors interested.

Given all these, Colliers said that developers should ensure timely completion of buildings so that tenants may consider their projects. Meanwhile, alternative business districts are of particular interest as rents are cheaper compared to primary central business districts (CBDs). In its report, it pointed out that the upcoming supply in various locations offers massive opportunities for tenants looking to relocate or consolidate.

For the residential sector, the report noted that developers should strategically position their products to enable them to ride on the surge in demand driven by starting families and the growing Chinese and Korean communities. It said that location will be key to ensure viable returns for buyers and owners in a market with massive supply, adding that projects in primary CBDs and those in easily accessible surrounding fringe areas will be the best investments.

In its fourth quarter 2017 report, Colliers said that primary CBDs saw marginal changes in vacancy from the previous quarter, with the Manila Bay area and Fort Bonifacio having the highest vacancy given the size of supply. Vacancy in the Manila Bay area improved from 18.3 percent to 17.2 percent due to lack of new supply and growing demand from employees of offshore gambling companies. As for Fort Bonifacio, vacancy went up slightly to 15.7 percent from 15.3 percent due to new supply, offset though by demand from young professionals, it added.

In the industrial sector, the report said that vacancies in the Cavite-Batangas-Laguna area is below eight-nine percent annually until 2020 as projects committed by investors start coming in. More industrial developers and occupiers are expected to expand to North and Central Luzon particularly Pampanga, Zambales and Tarlac due to infrastructure projects in the pipeline like the Clark Airport expansion and modernization, passenger rail from Malolos to Clark Green City in Capas, Tarlac and the Subic-Clark cargo railway.

Colliers said that the 77-km rail connection linking Subic Port with Clark International Airport will not only raise the seaport’s utilization and complement the airport’s operation, but would also develop the North-Central Luzon regions as an alternative hub for industrial operations.

In the same report, the group said that foreign arrivals could grow by a faster 10-15 percent this year to reach 7.3-7.5 million, from last year’s 6.62 million which is already a record-high. It expressed optimism that foreign arrivals will continue to rise over the next three years given sustained interest from Chinese, Japanese, Korean and US tourists as well as the rising arrivals from emerging tourist markets like Indonesia, Vietnam, France , Germany and the UK.

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