Still a good year ahead

Two big questions continue to hound us every time the year is about to end. Will the Philippine property sector continue to build, build, build next year and will Filipinos and foreigners alike continue to buy?

Colliers International, in a just released report, has given its top 10 forecast for 2019, giving rise to hopes that the sun will not set, at least not just yet, for this industry that has given so much to the country.

First on its list is that government’s plan of frontloading infrastructure projects will dictate the strategies of developers in and outside Metro Manila. Collier sees a more pronounced dispersal of office and residential developments outside the country’s capital next year, with property firms becoming more aggressive in acquiring land in Northern and Southern Luzon and ensuring that they are strategically positioned, especially in Pampanga, Bulacan, Cavite, Laguna and Batangas.

It noted that developers’ expansion should be supported by the completion of rail, expressway and toll road projects between 2020-2022 that are planned to pass through these provinces. These projects include the Metro Manila Subway, MRT-7, LRT-1 Extension, MRT-LRT Common Station, Manila Bus Rapid Transit 1, Clark Railway, NLEX-SLEX Connector Road, and Cavite-Laguna Expressway.

Second, Colliers expects Metro Manila office vacancy to remain at 5.3 percent due to strong demand. Over the next 12 months, it sees the delivery of around one million square meters of new office space and a net take-up of around 910,000 sqm. It also anticipates that the knowledge process outsourcing (KPO) sector will drive office demand in the next 12 months, adding that the process of top technology firms such as Google in Manila proves that the country remains on the radar of large KPO companies.

Thirdly, the report said that with offshore gaming companies accounting for 25 percent (280,000 sqm) of total office space absorbed in Metro Manila as of end-September 2018, and as they continue to expand and look for office buildings with large office plates, next year, these firms will occupy between 200,000-300,000 sqm of office space, or about 20-23 percent of projected take up in 2019.

Fourth, it projects that Manila’s flexible workspace stock will expand by at least 10 percent over the next three years due to the continued rise of micro, small and medium enterprises, influx of multinational corporations and outsourcing firms looking for plug-and-play offices, and the implementation of policy reforms that will likely improve the business climate, even as it sees malls, hotels, and dormitories for professionals offering more flexible workspaces which have grown in recent years due to the emergence of a mobile workforce and companies’ drive to bring down operating costs.

Fifth, Colliers sees the Manila Bay area, which has been aggressive in terms of new condominium developments since fourth quarter of 2016 due to strong demand from local and Chinese investors, to continue overtaking other submarkets such as the Makati central business district by 2012. In the third quarter of 2018, the Bay area already overtook Ortigas Center as the third largest submarket in terms of condo stock. The report believes that by next year, pre-selling condo prices in the Bay area will remain among the most expensive, with prices projected to breach the P300,000 per sqm mark.

Next on Collier’s fearless forecast list is that the luxury residential condo market demand will remain strong due to Metro Manila having one of the most attractive rental yields in the region at 5.1 percent, relatively low prices, and sustained demand from affluent Filipinos, foreign investors, and offshore gaming firms.

Seventh, the study believes that the food and beverage segment will remain as the major driver of retail space absorption in Metro Manila, covering at present 30-50 percent of leasable space in shopping centers.

Next is the expectation of a sustained demand for home furnishings given the increasing popularity of condo living in Metro Manila and more luxury brands opening shop in the Bay area over the next 12 months.

Ninth, Colliers sees Quezon City becoming more attractive for mixed-use projects as it hosts seven of the 13 substations of the planned Manila Subway, MRT 7, and the common LRT-MRT station. It expects more aggressive and strategic landbanking by developers around the first three stations (Mindanao Avenue, Tandang Sora, North Avenue).

And last on its list is Cebu. It expects property firms to be more aggressive in the Mandaue and Mactan areas with the completion of major infra projects. By next year, the report projects 700 new hotel rooms to be completed, raising the stock to 11,300 rooms as the tourism sector continues to grow.

Not so hidden agenda

TOURISM AWARD: House Speaker Gloria Macapagal-Arroyo gave a plaque of appreciation to Robert Lim Joseph for his relentless support in promoting and developing tourism in the country. Joseph is founder of the Tourism Educators and Movers of the Philippines; chairman of the Phil Wine Merchants, Columbia Transport and Wine Museum Hotel and Resto; director of the Rotary Club of Manila; and chairman of SKAL Makati. Joseph has received other awards in the past, including Award of Merit Province of Cebu 2012; Adopted son of the Province of Cebu 2012; Tourism Man of the Year Cebu Chamber of Commerce 2012; Tourism Exemplar Award by Media 2012; Tourism Exemplar Award by Media 2015; Hall of Famer Award by Media 2016; Lifetime Achievement Award Airline Cargo Association 2008; Lifetime Achievement Award in Tourism Philippine Airlines 2015; Lifetime Achievement Award Rotary Club of Manila; and People Asia Magazine’s ‘Men who Matter’ in Tourism 2015.
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