It is a big relief to know there are still many
in the business sector who believe President Duterte and his tough
campaign against illegal drugs is good for business.
In its third quarter report, Pinnacle Real
Estate Consulting Services noted that while the President has
intensified his anti-illegal drugs campaign to a level where hundreds
have died and thousands have surrendered, a fact which has alarmed some,
it still pales compared to the campaigns in Mexico, Colombo and other
countries.
But what is amazing, according to Pinnacle, is
how Filipinos quickly adjust to new political realities, and how the
economy and real estate market continue to chug along. The study pointed
out that President Duterte’s economic policies are more business
friendly, and his social policies are more populist when compared to the
policies of the previous administration.
“The government has been aggressive in
continuing infrastructure developments and is promoting public-private
partnership projects. President Duterte has been espousing dispersed
development, and has been keeping an eye in solving problems in the
Metropolis as well,” according to Pinnacle director for research and
consulting Jojo Salas who said these infrastructure projects would have
very positive impact to the economy and the real estate market.
It noted that Duterte’s policies are not only
pro-business, but also pro-people, emphasizing the President is
committed to dispersing spending and development in the provinces.
In its report, Pinnacle sees a continued demand
for office space from the business process outsourcing (BPO) sector,
low vacancy, stable rents, a very active pre-selling market, and delays
in opening new stock due to a tight labor market.
It noted that BPO industry experts are
confident to reach the target of 1.3 million employees and annual
revenue generation of $25 billion in the next couple of years. Though
the new IT-BPM Roadmap 2017 to 2022 is scheduled to be made public this
month, experts say the growth in the next five years would range between
12 percent to 18 percent, or two to three times the world’s average of
six percent annual growth, the study said.
Pinnacle pointed out that buoyed by this
continuous growth, real estate developers are relentless in building and
delivering office spaces, with over one million square meters of office
space are projected to open in the next two years in major business
districts in Metro Manila, breaching the seven million square
meter-mark.
The third quarter report revealed that overall
vacancy is below four percent and that the office market is still a
landlord’s market. Given the low vacancy, rents have been increasing
though plateauing in recent months. Rents in Makati Central Business
District (CBD) generally held up, where Premium Grade A buildings have a
weighted average of P1,300 per sqm per month, Grade A buildings have a
weighted average of P905 per sqm per month, and for Grade B&C
buildings, the weighted average is P695 per sqm per month.
For BGC, the weighted average rent is P895 per
sqm per month. The average rent of Grade A office buildings in Ortigas
is still at P 650 per sqm per month, while Alabang and Bay Area business
districts have a slightly higher weighted average rent of P660 per sqm
per month. Quezon City office rents have higher weighted average of P680
per sqm per month, also due to newer buildings.
It also revealed that selling of office spaces
is now a growing trend. Selling prices in Makati and BCG business
districts are north of P200,000 per square meter, Pinnacle said.
The report explained that the robust demand for
office space from the BPO industry is changing the landscape of a
number of cities such as Baguio, Davao, Dumaguete, Iloilo, Lipa, Metro
Bulacan (Baliuag, Calumpit, Malolos, Marilao and Meycauayan), Metro
Cavite (Bacoor, Dasmariñas and Imus), Metro Laguna (Calamba, Los Baños
and Sta. Rosa), Metro Naga (Naga and Pili), and Metro Rizal (Antipolo,
Cainta and Taytay).
It said BPO companies are choosing those areas
for various reasons; healthy demographics and relatively developed
infrastructures are the key criteria. “Apart from office spaces, these
markets would probably experience developments of the residential and
commercial-retails spaces, and perhaps, hotel rooms as well. With the
push of President Duterte to disperse spending and growth, development
of these “Next 10 Markets” is likely to happen sooner,” Pinnacle added.
As for the residential market, the study noted
there is a wide range of choices and Metro Manila fringe areas are being
explored, that prices are becoming competitive though still increasing,
that investment buyers are now testing the rental market, and that
there are also delays in turnover of new buildings due to a shortage in
skilled labor.
Pinnacle stressed that the affordable and
socialized housing segments are still underserved, with the projected
housing backlog at more than 5.5 million by end of 2016.
The report revealed there is still a sustained
demand for luxury high-end condominium units mainly coming from local
executives and expats. Makati and the BGC business districts dominate
the high-end residential products. There is also a perceived oversupply
of mid-market residential condominium buildings in Metro Manila. “While
top players like Ayala, DMCI, Filinvest, Lopez/Rockwell, Megaworld,
Federal Land, Robinsons, SM, and Vista Land Groups will continue to
build due to their vast distribution channels, competing against these
players for the same market segment is not advisable, “ it said.
It added it is important to monitor the leasing
market in the coming quarters. Leasing of studio and one-bedroom units
is stable and still ranges between P15,000 to P30,000, and may reach the
P50,000 per month-level, depending on the location, furnishing, and
amenities of the condominium building. Luxury condominium units command
the highest rents at P1,000 per square meter per month.
=========================================================================
Repost from:
HIDDEN AGENDA By Mary Ann Reyes (The Philippine Star) | Updated October 5, 2016 - 12:00am
http://www.philstar.com/business/2016/10/05/1630332/good-business
