CONDOMINIUM units for the middle market segment and office spaces for business process outsourcing (BPO) will continue to drive growth in the real estate sector in Metro Manila, experts said yesterday.
Growth is expected in rent, land value and property prices until 2015, officials of global real estate service firm Jones Lang LaSalle Leechiu (JLLL) said in a press briefing.
JLLL sees increasing demand from “end-users,” investors and BPO locators amid low interest rates and a prudent flow of funds into the country.
“We are anticipating that in 2012 onwards, rents will start to rise again,” Lindsay Orr, chief operating officer of JLLL, said in the briefing.
“A lot of cheap, quality stocks in the market have already been taken up,” David Leechiu, country head of JLLL, told reporters.
For the office segment, vacancies will rise to 248,087 square meters (sq. m.) next year from 129,883 sq. m. this year.
But this will drop to 144,313 sq. m. in 2012 and 111,606 sq. m. in 2013.
“Our advise to developers is that if they want to do something, do it now so they will be in the market at the right time,” Mr. Orr said, adding that BPO businesses will drive demand in areas like the Bonifacio Global City in Taguig, and business districts in Makati and Ortigas Center in Pasig.
“We are confident that even if there is no change [in policy], nothing happens in the [government’s] public-private partnership [scheme], and tax collection levels do not improve, the demand will stay constant at 300,000 sq. m.,” Mr. Leechiu explained.
The supply of office space for 2008 to 2014 was estimated at 2.02 million sq. m.
In terms of rental prices, Mr. Leechiu said: “Prices are going up in the next five years, the way we saw them in 2003 to 2008.”
For the residential segment, Claro d.G. Cordero, Jr., head of research, consulting and valuation of JLLL, said: “We are expecting more than 100,000 units in the next five years ... the composition is more of the middle segment development.”
Condominium units in the middle market segment are valued at P1.5 million to P10 million each, with average unit size at 160 sq. m.
Jones Lang said middle market units will account for 94% of total development in the residential sector, with only 3% or 3,187 units in the high-end segment.
“The decision to build [more condominium units] is due to improvement in the economy and manifestations of real demand,” Mr. Cordero said.
JLLL said the annual growth rates in condominium rentals is at 8% or P420 per sq. m. per month.
The investment yield in Metro Manila, meanwhile, is at 6.36%, higher than the 0.78%, 2.38% and 6.13% for 91-day, 364-day, and 10-year Treasury bonds, respectively.
“It makes property investments more enticing. Land value is increasing at phenomenal rates,” Mr. Cordero said.
Jones Lang LaSalle Leechiu is one of the country’s leading property consulting firms.
JLLL sold P4.5 billion worth of properties in Metro Manila and managed 100,000 sq. m. of construction fit-out projects in the 10 months that ended in October.
Source: Business World, 07 December 2010
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Global real-estate services firm Jones Lang LaSalle Leechiu continues to see strength in the Philippine residential condominium sector, with the next four years to be driven by new supply catering to the mid-end segment.
Moreover, the office space leasing sector— buoyed by business process outsourcing (BPO) companies—is expected to see an uptick in rental rates following an expected supply shortfall by 2012, the firm said in a press briefing on Tuesday.
For the residential sector, Jones Lang country head David Leechiu said another 100,599 condominium units in the mid-end segment are expected to come on-stream by 2014 on top of the existing 55,526 units built since 1999.
Demand for these types of units, priced from P1.5 million to P10 million, is also expected to remain steady with the favorable interest-rate environment, ready financing from banks and overseas Filipino buyers, he said.
“In 2005, no one could have imagined how deep the mid-end residential condominium sector actually was. It will continue to be a source of growth for many developers up to at least 2014,” Leechiu said.
The bulk of new mid-end condominiums is expected to come from Metro Manila, mainly in the Makati business district (28 percent), Quezon City ( 27 percent), Ortigas, Pasig and Mandaluyong (17 percent) and Bonifacio Global City in Taguig ( 11 percent), the firm added.
With the housing deficit estimated at 4 million, units various developers have been positioning themselves to tap buyers in the mid-end segment.
Among publicly listed residential condominium developers, Jones Lang sees Sy-led SM Development Corp. to lead the pack with a 22-percent market share over the next five years from the current 4 percent.
Megaworld Corp. follows with a 14-percent market share, Ayala Land Inc. with a tenth and Robinsons Land Corp. with 8 percent.
Jones Lang said the average annual growth rate in Metro Manila since 2005 is pegged at 8 percent, with the exception of certain areas like Bonifacio Global City and Makati City which exceed this figure.
The value of units in this segment has also gained moderately in the last five years, with the annual average at 13 percent, or P78,122 per square meter (sqm). As with rental rates, Bonifacio Global City and Makati City outpace industry growth at 18 percent and 14 percent, respectively.
Jones Lang sees residential rental rates to remain stable, given the large influx of supply.
In the office segment, however, Jones Lang sees the reverse given an expected supply shortfall beginning late next year.
“In all probability, office [rental rates] will go back to 2008 level. Prices are going to keep going up in the next five years,” Leechiu said, noting that prices have bottomed out in 2009. “There is significant growth in the BPO industry.”
The company executive explained that the average demand line for office space is at 75,000 sqm per quarter. Total supply in 2010 is expected to increase by 283,973 sqm, and by another 276,587 sqm in 2011.
But by 2012 the number will drop to 163,313 sqm. A deficit of 100,000 sqm is expected in three years, and further to 200,000 sqm by 2014.
source: Business Mirror, 07 December 2010
RA 9646, popularly known as Real Estate Service Act ( RESA ) has been approved for implementation when its Implementing Rules and Regulations ( IRR ) was published on July 24 2010 at Philippine Daily Inquirer and Philippine Star. For details on the RESA Law, visit www.ra9646.com, the central repository of all updates on RA 9646.
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