New growth areas in real estate emerging

MANILA, Philippines — The Philippine property sector should prepare and capitalize on emerging real estate classes if it wants to compete with other Asian markets, a property consultancy firm said.

Real estate and investment management services firm JLL said investors in the Asia Pacific region are now seriously looking into new sectors of the real estate market such as aged care, student housing and data centers.

With attractive yields and long-term growth prospects, these alternatives are potentially big economic drivers as they complement more traditional sector investments, JLL said.

JLL said one of the most promising new real estate asset classes for the country is aged care, in line with the rising senior population and retirees.

“The Philippines makes an attractive destination for retirees because of the competitive cost of living, hospitable culture and warm climate. Currently, 8 Newtown Boulevard and One Pacific Residence by Megaworld in Mactan Newton, Cebu have been mostly sold to Japanese retirees. Another retirement facility is Amonsagana in Balamban, Cebu which is being run by Syntech Properties Inc., under the Woh Hup Group from Singapore,” JLL Philippines head of research and consulting Janlo de los Reyes said.

JLL said another alternative prospect is student housing, as there are no formal student housing yet in the country amid the rise of dormitels in the fringes of Makati and Bonifacio Global City.

De los Reyes said these professionalized forms of dorms accommodation have piqued the interest of major real estate players, with SM buying 61.2 percent of MyTown Dormitel while Fort Bonifacio Development Corp. is developing Flats BGC at 5th Avenue which has 1,500 beds.

JLL said data centers are also expected to require a bigger chunk of the property market with yields of between 15 percent to 25 percent in leveled returns.

In the Philippines, apart from telcos such as PLDT and Globe investing in data centers, there are now multinational corporations looking to set up operations in the country, JLL said.

De los Reyes said these new alternatives may serve as complements to the business process outsourcing (BPO) industry, which takes up a huge chunk of the Philippine real estate market.

“Data centers would be able to support the BPO industry as the sector moves up higher in value chain offerings while dormitels can easily provide accommodation to BPO employees,” he said.

De Los Reyes said JLL Philippines plans to fully dedicate resources into managing these new real estate sectors toward the end of the year.