Strong economic growth to boost property sector – Colliers
Credit to Author: Anna Leah E. Gonzales| Date: Thu, 28 Nov 2019 16:49:28 +0000
THE country’s strong economic growth supported by high government and infrastructure spending will boost the property sector, a real estate consultancy firm said on Thursday.
In a report, Colliers International Philippines Research Manager Joey Roi Bondoc said the 6.3-percent economic growth in the third quarter of the year, which was driven by the growth in government spending and private construction, “indicates a strong appetite for “office towers, residential units, malls, hotels, and industrial parks across the country.”
“With economic growth for the remainder of President [Rodrigo] Duterte’s term (June 30, 2022) likely to be anchored on government and infrastructure spending, Colliers sees a sustained property market over the next 12 to 36 months,” he added.
“Over the next two years, Colliers sees the economic growth being sustained by an improved credit rating, decelerating inflation and a higher ranking in global competitiveness surveys.”
Bondoc also said Philippine offshore gaming operators (POGOs) would continue to lead office space take-up over the next two or three years following lawmakers’ efforts to legitimize their operations.
The report cited that for the third quarter alone, offshore gaming accounted for 37 percent of all closed deals, representing about 442,000 square meters (sqm) of space.
To date, POGOs occupy 1.14 million sqm or about 10 percent of the total leasable office space in Metro Manila.
Bondoc said, however, that headwinds for the office segment include the second package of the tax reform and the slower economic growth as projected by multilateral lending firms and foreign banks.
“A slower domestic economy is likely to slow down the expansion of traditional and non-outsourcing tenants; and outsourcing firms (call centers and shared service firms) taking a wait-and-see stance due to uncertainty over the tax reform proposal of the government which intends to reduce tax perks that these firms currently enjoy,” he said.
For the residential sector, Bondoc said demand drivers will include mid-income house and lots, condominiums priced at P3.2 million to P5.9 million, and co-living units.
He said traffic jams, caused by the construction and rehabilitation of railways and expressways across Metro Manila, compelled developers to build co-living projects near key business districts.
“Colliers believes that these types of housing are likely to remain popular among Metro Manila employees especially as major infrastructure projects, intended to ease
Metro Manila traffic, will likely continue through at least 2025,” said Bondoc.
“Colliers sees a more pronounced development of these projects, and developers should start incorporating differentiating features, such as childcare facilities and private lounges for phone calls, for example,” Bondoc added.
In terms of retail, Bondoc said demand drivers are food and beverage and miscellaneous goods.
He said housing flexible workspace operators is also another opportunity for mall developers.
“Colliers has observed that flexible workspace operators are continuously looking for space across Metro Manila. But with office vacancies hovering between 0.5 percent and 1 percent in prime locations such as Makati CBD (Central Business District) and the Bay Area, these operators have been scrambling to find suitable space,” said Bondoc.
The report, citing a research conducted by Colliers USA, said that flexible workspaces have the potential to drive consumer traffic.