Pinnacle Real Estate Consulting Services has just come out with its Philippine Real Estate Market Insight for the fourth quarter of 2016 and as in previous quarters, demand is still high and supply remains tight.
Pinnacle noted in its report that with the business process outsourcing (BPO) industry expected to grow between 12 percent to 18 percent, or two to three times the world’s average of six percent annual growth, real estate developers have not wasted time and have been pacing their developments to satisfy the pent-up demand for office space.
It said that overall vacancy is below three percent despite the fact that there are over seven million square meters of Grade A and Prime Grade A office buildings in Metro Manila business districts.
Pinnacle pointed out that the office market is still a landlord’s market, and given the very high occupancy, rents have been increasing, though slightly, in recent months.
It stressed that the initial fear of softening rents has been averted due to brisk demand for office space, plus the unwelcome news of delayed delivery of office buildings due to lack of skilled workers.
Jojo Salas, director for research and consulting for Pinnacle, noted that selling of office spaces is now a growing trend and that while the floor area for sale accounts for less than 10 percent of the total stock of over seven million square meters, this is seen to steadily grow in the coming quarters.
Selling prices in Makati and BCG business districts are north of P200,000 per square meter, Pinnacle added.
As for the residential market, Pinnacle noted that the Metropolitan Manila residential market is dominated by condominium developments in recent years, due to increasing land values, with the estimated total number of condominium units expected to reach over 200,000 by the end of last year. Based on Pinnacle Research, 44 percent of the condominium developments are high-end (over P7 million), 37 percent are middle mid-market; and 19 percent are lower mid-market. With the approval of vertical socialized housing and increase of economic housing price ceiling to P1.7 million, the lower mid-market and economic segments are expected to grow in the coming years, it said.
But while areas like Manila and Quezon City are producing condominium projects at staggering number (Manila launched over 20,000 units from 2009-2015 while in Quezon City, there were around 40,000 during the same period), these still pale in comparison to the projected housing needs in Metro Manila of more than 100,000 housing units per year (National Economic and Development Authority projections), it noted.
Pinnacle pointed out that while this total includes the “Can’t Afford” category, at least 350,000 of the projected housing needs in Metro Manila per year are coming from households that can afford to buy residential units.
In the retail market, the report noted how commercial retail malls went on with their usual way of generating income during the fourth quarter. Occupancy of malls has always been healthy, commercial mall rents have been very stable, and this property segment is still a landlord’s market, it added.
As for the hotel and gaming market, Pinnacle said that tourist arrivals are at pace to reach the six million-mark by end of 2016 and this is a very good news to the operators of more than 20,000 deluxe hotel rooms in Metro Manila.
It added that with BIR Revenue Regulations 7-2016 spelling out the fiscal incentives that can be given to firms operating inside tourism enterprise zones (TEZs) under the Tourism Act of 2009 already out, this will further boost the development of tourism infrastructure and facilities around the Philippines.
Salas in the report noted that the big players will usually go for first mover advantage and that with their machines, the Ayala and SM Groups shall continue to pace real estate developments.
He said that the Ayala Group will continue to develop townships and will grow its recurring income base while the SM Group will likewise continue to expand its recurring income developments, as well as property sales.
Salas pointed out that all the big players are competing for their market share. The Megaworld Group allocated P150 billion for its capital expenditure for the remainder of 2016 and up to 2017 while the Filinvest Group is spending P5 billion just for housing and condominium developments in the next three years. The Robinsons Group has been busy building condominium projects for sale and expanding its recurring income base (office, malls and hotels).
He added that the BPOs and traditional companies will continue to look for office spaces, end-users and investors will scout for suitable residences, small retailers shall continue taking advantage of Filipinos affinity to shopping, tourists will continue to fill up hotel rooms, manufacturers will ceaselessly look for optimum industrial spaces, while savvy real estate developers as usual will continue do their due diligence, and look for the unsatisfied demand, and supply the gap.
Not so hidden agenda
NITAS SUPPORTS NEW TRB CHIEF: Multi-awarded movie and television actor Cesar Montano is shown with Network of Independent Travel Agencies (NITAS) president Angel Ramos Bognot and chairperson Consul General Robert Lim Joseph during the NITAS Christmas Party at the Manila Yacht Club. The group promised to support Montano who has been appointed chief operating officer of the Tourism Promotions Board.
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