Wazzup Pilipinas!
With China’s property market cooling after years of rapid growth, and Singapore’s and Hong Kong’s housing markets expected to decline steadily, 2014 has seen real estate in the emerging markets come into focus. The Philippines, in particular, performed (and is performing) well. Although GDP growth slowed slightly, the country’s economy continues to outperform most of its neighbors.
“The Philippine property sector’s 2014 performance is marked by exuberance in certain segments traditionally overlooked,” said Lamudi Philippines managing director Jacqueline van den Ende. “For example, Metro Manila’s commercial real estate sector was and continues to be buoyant, bolstered by a healthy demand from traditional office takers and the business process outsourcing (BPO) industry.”
As the year draws to a close, global real estate portal Lamudi looks back at an eventful 12 months for the Philippines’ property sector.
1. BSP’s Preemptive Measures
Experts say that there’s no real estate bubble in the Philippines, and this is largely due to the fact that the country’s financial industry is cautious and well regulated. In order to prevent the Philippines’ real estate market from overheating, the government through the Bangkok Sentral ng Pilipinas (BSP) has been more involved in devising preemptive measures.
In July, for instance, the BSP implemented a real estate stress test, which mandates all commercial banks to provide adequate capital requirements in light of their increasing exposure to real estate loans. This ensures that banks would be capable of absorbing risks in the event of a shock. In addition, the BSP is slated to release its real estate price index by 2015 to better monitor prices, in an effort to avoid possible asset bubbles from forming.
2. Metro Manila Land Values Breached the 1997 Peak
After 17 years, land values in Metro Manila breached the peak prices reached before the onset of the 1997 Asian financial crisis. In a report published by Colliers International, two parcels of land (both 1,600 sqm) in Fort Bonifacio owned by the Government System Insurance Corporation (GSIS) were sold at a record Php500,000 and Php458,000 per sqm. In nearby Makati City, real estate giant Ayala Land bought the abandoned JAKA Tower along Ayala Avenue for an undisclosed amount, which was speculated to be between Php500,000 and Php560,000 per sqm.
These events support a statement made recently by Jose Romarx Salas, head of research at Pinnacle Real Estate Consulting, who observed that finding suitable and large enough land in Metro Manila is the challenge right now for property developers. This prompts them to bid high for limited supply of land in the capital, which pushes up already skyrocketing prices.
3. Retail Boom
In the first quarter of 2013, at least 170,000 sqm of new retail space entered the market, and more than 100,000 sqm is expected to be completed before 2014 ends. According to Jan Custodio, CBRE’s head of global research and consultancy, the sustained level of spending is fueling the growth of the country’s retail sector. New malls opened in 2014, which include Fisher Mall and Fairview terraces in Quezon City, Century Mall in Makati, and The District and Unimart Capitol Commons in Pasig. “Mall developers have been expanding to accommodate the international brands coming in and the increase in spending of consumers in the country,” Custodio said.
More than 250 international establishments under coffee and restaurants, luxury and business, and mid-range fashion retailers entered the Philippines in 2014. Swedish retailer H&M unveiled its 3,000-sqm flagship store in SM Megamall in mid-October, while four more H&M branches will open before the end of 2014.
Fashion retailers are not the only ones expanding in the Philippines, but chains of convenience stores as well. According to a report published in the Wall Street Journal, in 2012 only 7-Eleven and Mini Stop were fighting over Metro Manila’s most prime of retail spots. Now there are seven, which include FamilyMart, All Day, Circle K, Alfamart, and Lawson. The WSJ forecast that the Philippines would see the number of convenience stores double from around 2,000 today to 4,000 within four years.
4. Second-Tier Cities Hog the Spotlight
The Philippines is steadily becoming less Metro Manila-centric, and real estate developments are starting to move outside the capital. For example, Iloilo in the Visayas region is now being touted as one of the country’s next wave cities and considered a critical center of economic growth. Property giant Megaworld is now building a sprawling business here, which when completed will boast business process outsourcing (BPO) offices, hotels, condominiums, and even a convention center. Meanwhile, Century Properties will try to duplicate its successful Azure project in San Fernando, Pampanga, while Ayala Land will build a massive township in Porac in the same province.
5. Manila Bay Area to Rival Macau’s Integrated Resorts
The Philippine Amusement and Gaming Corp.’s (PAGCOR) Entertainment City complex, a huge parcel of reclaimed land in Parañaque City, will see the opening of its second integrated resort this year—the City of Dreams Manila. It followed Solaire Resorts & Casino of Bloomberry Resorts Corp., which opened in 2013, and will be followed by the opening of the Okada Group’s Manila Bay Resorts in 2015.
Also this year, the second Resorts World property broke ground in the complex, with the completion date expected in the fourth quarter of 2018. State-run PAGCOR, in an article published in the Philippine Daily Inquirer, is banking on the whole complex to hit $7 billion in gaming revenue by 2019.
Ross is known as the Pambansang Blogger ng Pilipinas - An Information and Communication Technology (ICT) Professional by profession and a Social Media Evangelist by heart.
This is the huge property project. Almost in 3 years. it completed. It became the fame of Philippine. As well, I am providing Air Conditioning Installation Services Palm Desert CA to you. You can get more detail about this service.
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