Phl property on track for another breakthrough year

MANILA, Philippines - Another breakthrough year looms for real estate in 2017 as the local market remains largely insulated against geo-political risks, a property expert said.

Rick Santos, chairman and CEO of Santos Knight Frank Inc., said the country’s property market is capable of shielding itself from the political noises brought about by the changes in administrations in both the Philippines and United States.

“In any country, it is natural to have that period of adjustment every time there is a change in government. But I think the Philippine real estate market is fundamentally sound and demand will continue,” Santos told The STAR.

For this year, Santos’ property consultancy company has expressed high hopes for the domestic property market, with bullishness cutting across all sectors.

For the office sector, Santos Knight Frank said there are a lot of office spaces that would be available in the market within the year with over 1.6 million square meters of gross leasable area, most of which are already pre-committed.

Last year, only four of the 20 office buildings scheduled to be delivered in the fourth quarter were able to start operating before year-end. The others, which were delayed, are expected to commence operations between the first quarter of 2017 up to the first quarter of 2018.

Santos Knight Frank said the lack of skilled workers for the construction sector remains the main reason for the delays in the turnover of office spaces.

“Nonetheless, we are optimistic across the office sector. Clearly, we’ve seen a huge amount of interest in Davao for obvious reasons. Also in the bay area, as the new infrastructure made it easier to get there,” Santos said.

In the residential sector, the limited supply of developable land in the country’s top cities such as Makati and Taguig has encouraged property developers to undertake projects outside or into areas where there are ample amount of land.

As a result, Santos Knight Frank said residential developments in the countryside became prominent in the last quarter of 2016 and many developers launched projects in various areas outside the Metro to capture relatively new market segments and foster growth.

This year, demand-drivers are positively expected to persist, underpinned by the country’s sound macroeconomic fundamentals.

Sustained investor interests, growing investments from OFWs, robust business process outsourcing sector, and inflow of millennial workforce are seen to further bolster the sector.

“On the residential sector, we’re extremely bullish on the high end side especially as we see more Asian and high net worth Chinese investors coming in,” Santos said.

The retail sector, for its part, received a big boost last year from increased consumption expenditure, according to the property consultancy firm.

Shopping malls, it said, have adopted a lifestyle-oriented trend, building community malls and retail podiums in Metro Manila as well as outside cities. Retail openings in clothing apparel and food chains were still prevalent because of current lifestyle trends.

For this year, retail expansion is forecast to be driven by developments outside Metro Manila as demand in the countryside remains robust.

“On the retail side we are seeing a lot of demand. Retail is still an event here. As we see the demographics of the country, there is strong interest in shopping and in malling,” Santos said.

In the long run, Santos said the continued growth of the Philippine property market would hinge on the country’s economic performance and its infrastructure development.