Phl property sector remains on strong growth trajectory

MANILA, Philippines - The Philippine property sector remains on a strong growth path as it leans on the three building blocks of rapid urbanization, robust services sector, and active retail and hotel expansion.

Socioeconomic Planning Secretary Arsenio M. Balisacan said the country’s economic growth had been growing at an average 6.2 percent in the past five years and one of the key sectors that has benefitted from this growth is property and real estate.

“A key source of growth in the Philippine property market is rapid urbanization and the accompanying rise of the residential sector,” Balisacan said.

The country’s population living in urban centers is forecast to reach 56.3 percent by 2030, from 48.6 percent recorded in 2010.

Condominiums are becoming particularly attractive in Metro Manila, with an estimated increase in supply of 14,000 units from 2012 to 2018.

Demand for residential properties is mainly driven by the middle class, particularly the overseas Filipinos who in 2014 repatriated about $24.3 billion, allocating about $7 billion into property investments.

Also, the growth of townships — or self-contained districts that fuse together homes, offices, shops, and schools in linked communities — have been increasing led by the major property developers such as Ayala Land and SM Development Corp.

The country’s growing services sector is also another key driver of property market growth.

As of 2014, more than half of the country’s output—or about 57 percent of gross domestic product (GDP)—was accounted for by the services sector, which comprises not only real estate activities but also information and communication; financial and insurance activities; education, health, and social work.

Among these sectors, the country’s business process outsourcing (BPO) industry is proving to be particularly important for the growth of the country’s property sector.

“Fueled by increased new investments from large and mid-sized foreign investors, our BPO sector has remained among Asia’s brightest spots over the years,” Balisacan pointed out.

From a $3.4-billion industry in 2006, the outsourcing industry is estimated to have reached $18 billion in 2014, and is forecast to accelerate further to about $22 billion this year.

Another promising area of real estate growth is the retail and hotel property market.

There has been a significant growth in the number of retail shopping malls, and in the future projections point to a growing expansion and market share of malls located in the provinces. Some studies suggest that by 2018 more than half of total retail property supplies will be found in the provinces.

Balisacan said tourism arrivals and receipts are also incentivizing the increase in supply of hotel developments in and out of Metro Manila.

In the next few years a significant number of these new hotel properties will be constructed particularly in the southern part of Metro Manila, including Visayas and Mindanao.

 “The emergence of new hotel brands and budget hotel chains in the provinces are also expected to grow further in response to robust tourism growth,” he added.