China pivot benefits Philippine property sector – Colliers

MANILA, Philippines — President Duterte’s pivot to China has been a boon to the Philippine property market so far, and China President Xi Jinping’s recent commitment to support the Build Build Build program is expected to further boost the sector.

In a recent report, global real estate services company Colliers said warmer relations between the Chinese and Philippine governments has been beneficial the economy, with growth trickling down to property segments such as office, residential, hotel and industrial.

“A more active participation of China into the Philippines’ ambitious infrastructure development program should help sustain growth in the local property sector over the medium to long term,” Colliers said.

It said the office sector was among the biggest recipient of the improved Philippine-China relations, with higher demand from offshore gambling firms accounting for 35 percent of total office space transactions in 2017.

“Chinese offshore gambling firms have started to open shop in Cebu, accounting for almost 25 percent of recorded transactions last year,” it reported.

Colliers expects Chinese companies, which are requiring between 20,000 square meters and 30,000 square meters per site, to sustain office demand as inquiries picked up again in the last quarter of 2017.

“The strong offshore gambling sector is also driving residential condominium sales especially in the Manila Bay Area where office buildings are developed alongside residential towers,” Colliers said.

Colliers said Chinese investors accounted for 10 percent of SM Prime’s international condominium sales in 2017, an improvement from less than five percent in 2016, while Chinese buyers accounted for nearly 50 percent of Ayala Land’s international sales last year.

“The takeup from Chinese investors helped propel Metro Manila condominium sales to a record-high 52,600 units in 2017 from 42,500 in 2016,” the property consultancy firm said.

The hotel sector, meanwhile, is also benefitting due to the influx of Chinese tourists in the country.

According to Colliers, the Philippines welcomed more than 960,000 visitors from

China in 2017, up 43 percent from the previous year.

“China is now the Philippines’ second largest tourist market after South Korea. We are seeing the aggressive development of two and three-star hotels in the Manila Bay Area and the fringes of Makati central business district due to continued surge of Chinese tourists,” it said.

“Colliers believes that the influx of more Chinese visitors will play an important part in sustaining hotel occupancy of between 65 percent and 70 percent across Metro Manila over the next 12 months,” it added.

The industrial segment is also an area seen poised for growth following the signing of a memorandum of understanding between the Philippine and Chinese governments on industrial park development during the ASEAN summit in Manila last year.

“This should raise industrial supply in the country particularly now that major developers are heading north of Manila. Chinese industrial park developers are aware of the rising demand for industrial space in the Philippines given the country’s expanding manufacturing and export base,” Colliers said.