Property sector to sustain growth momentum in 2017

CARRYING the momentum of a scintillating performance in 2016, the Philippine real-estate industry is going to have another banner year, as the information technology-business process management (IT-BPM), commercial, residential, industrial and retail sectors displayed robust growth, according to forecasts by Santos Knight Frank Inc.

Knight Frank Chairman and CEO Rick Santos and Knight Frank Australia CEO Stephen Ellis

“We’re very optimistic about the growth of the real-estate industry in the Philippines, which has been driven by favorable demographics, continuing foreign direct investment, BPO [business process outsourcing] expansion, strong overseas remittances and continued infrastructure development.

“The economic fundamentals that have positioned the country on a prime spot in global investments remain extremely strong. We believe that the government’s socioeconomic agenda and infrastructure program will further propel GDP in the years to come,” said Rick M. Santos, chairman and CEO of Santos Knight Frank Inc., in a press briefing on January 18 held in Makati City.

He noted that the solid macroeconomic performance of the country’s GDP, continues to show impressive growth posting a 7.1-percent mark in the third quarter, making the Philippines the fastest-growing major Asian economy, outpacing its neighboring Asian countries—China 6.7 percent; Vietnam, 6.4 percent; Indonesia, 5 percent; and Malaysia, 4.3 percent.

Citing Urban Land Institute’s Emerging Trends in Real Estate 2017, Santos said Metro Manila will experience continuous growth with Manila being ranked third in investment and fourth in development among 22 Asia-Pacific countries.

Santos Knight Frank said the country’s IT-BPM industry will expand across the country in “new wave cities”, such as Clark, Cebu and Davao.

In Clark alone, Global Gateway Logistics City is being positioned as a state-of-the-art, master-planned, mixed-use development that will add 300,000 jobs through locators when completed. “With 1.6 million square meters of office space under way in the Philippines this year, the need for a professional and efficient service provider of facilities management, project management, property management and technical services is of utmost importance. We see strong growth opportunities for our global commercial services and asset services, along with our business lines to expand in the Philippines,” Santos explained.

He also explained that the office sector benefited  from the property boom, as demand for office spaces was sustained in the fourth quarter of 2016. Overall vacancy rate continues to drop, with the fourth-quarter vacancy rates declining to 1.48 percent, from 3.7 percent in the same period last year. This is amid new developments being turned over in the last quarter of the year.

In its report, Makati CBD Central Business District remained to have the highest asking rates among all major CBDs in Metro Manila. Weighted lease rate of Makati CBD is now pegged at P1.226.57, followed by Bonifacio Global City, with P931.28 and Quezon City, with P710.98.

Other areas on the list are Bay City, with P691.28; Alabang, with P666.81; and Ortigas, with P631.24. Alabang vacancy rate is now on its lowest at 1.65 percent compared to last year’s double digit of 17.07 percent.  On the other hand, Makati dipped slightly, from 1.31 percent  to 0.88 percent.

“Only four of the 20 office buildings scheduled to be delivered in the fourth quarter were able to start operating before yearend. The others are expected to commence operations between the first quarter of 2017 up to the first quarter of 2018.

“Lack of skilled workers for the construction sector is still the main reason for delays in the turnover of the office spaces,” Knight Frank said in its 2017, outlook for the office sector.

“A bulk of office spaces will be available in the market within the year 2017 with over 1.6 million-square meter of gross leasable area (GLA), most of which are already pre-committed.”

As far as the residential sector is concerned, sustained investor interests, growing investments from Filipino expatriates, robust IT-BPM  sector and the entry  of millennials in the job market will further bolster the residential sector.

Santos Knight Frank reported stable increase of consumer spending evident this year has required manufacturing firms to expand operations and boost the capacity of storage facilities.

“Upcoming retail developments in Metro Manila will add about 485,000 sq m of GLA until 2018, with 43.28 percent rising in Bay City, 19.62 percent in Pasig City  and 19.19 percent in Quezon City, respectively. Retail expansion will be driven by developments outside Metro Manila, as demand in the countryside remains robust,” it said in its 2017 report.

“The BPO industry thrives, as economies in the West recover. Outsourcing continues to be one of the most viable options for Western companies to cut on cost and to operate efficiently, and the Philippines remains one of the best destinations for these outsourced jobs. We are excited to enter this new phase in my company’s development as Santos Knight Frank and grow our existing business, as well as continue to make a significant positive impact on the Philippine real-estate sector,” Santos concluded.