DRIVEN by the continued positive outlook on the economy leading to a stable investment, the Philippine property sector will enjoy another banner year in 2015.
Claro Cordero, head research and consulting of Jones Lang LaSalle (JLL), said the other growth drivers of the property sector are the projected expansion of the offshore and outsource industry to cope with the increasing demand for outsourcing services and the healthy inflow of remittances from overseas Filipino workers (OFWs), which will continue to perk up the demand for more housing units.
In his presentation during JLL’s recent news briefing in Makati City, Cordero said 2014 was a banner year for the residential sector as approximately 204,300 units were completed in Metro Manila during the year. As far as the supply of residential condominiums in Metro Manila is concerned, Cordero said there was increase in the supply of new units to 41,819 units from 21,540 units in 2013. The new supply is classified to mid-end market prices ranging from P980,000 to P1.5 million.
He said OFW remittances growing 6.1 percent year-on-year as of September 2014 will continue to drive the demand for the residential sector. “By the year-end of 2014, remittances will reach $24 billion,” Cordero said.
“OFW remittances are expected to grow at around 7 percent from 2014 to 2017,” he added.
Megaworld Corp. has the biggest market share for projects with 34,000 units, followed by SM with 28,600 units and DMCI with 21,700 units. In sales take-up across all horizontal and vertical projects, Ayala Land Inc. had the biggest value with P80 billion, followed by Megaworld with P70 billion. Vista Land emerged third with a total value of P39 billion.
Furthermore, Cordero said the sales of key residential project of major developers continues to be healthy as it registered an average of 73-percent take-up rate from 2015 to 2020. In 2013, 94 percent of the projects have been sold, while 6 percent remain unsold. For the current year, he said 93 percent of the units were already sold out.
The high demand continues beyond 2014 as 81 percent and 83 percent have been sold for 2015 and 2016, respectively. These projects covered the mid-range to high-end condominium developments of major property developers.
The business-process outsourcing (BPO) industry was the biggest client for office space in 2014 accounting for more than 50 percent to 60 percent of the total take-up. The information technology sector accounted for 11 percent take-up.
Shiela Lobien, head of leasing of JLL Philippines, said over 180,000 square meter in total were transacted for leasing in 2014 by the company. The biggest transaction was a 51,500-sq-m lease to a multinational BPO at the Bonifacio Global City (BGC). “The BGC is the most logical choice for a BPO because it is accessible to Makati and its new buildings are ready and equipped for such requirements,” she said.
“The BPO is minimally affected by economic and political situations and it will continue to buoy the office space industry as BPO companies continue to demand BPO-ready buildings in secure locations where there is an ample supply of talent at lower costs,” she said.
Lobien said the office space reached a historic high in 2014 as supply take-up and precommitments reached 500,600 sq m as of end of November 2014. Pasig City had the highest take-up among the Metro Manila cities taking 25 percent of the pie, followed by Quezon City (24 percent) and BGC (22 percent).
The take-up is high as the total vacancy rate across Metro Manila business districts is only 4 percent. “A single-digit vacancy rate is very good for the economy,” she shared.
Lobien said the affordable rental rate is also one of the factors why foreign investors start their operations in the country. For instance, she said the affordable rates in BGC continue to attract major locators particularly in the BPO sector. She said there was an increase of only 1 percent in office rental rates from P790 per sq m in the fourth quarter of last year to P800 in the same period of 2014.
“Even with the affordable rates prevailing at the BGC, there is no oversupply as vacancies are easily taken up. At the moment, there is equilibrium at the BGC,” she said.
The prime area of Makati Commercial Business District continues to be the most expensive office space posting a 14-percent increase with a rental average of P1,200 per sq m in December 2014 from a rate of P1,050 per sq m in the same period last year.
In terms of location, BGC emerged as the top choice for BPO operations with 35 percent. Quezon City came in second with 28 percent; and Makati City ranked third with 21 percent.