Santos Knight Frank upbeat on Philippine real estate growth

02 June 2017

Outlook for the Philippines’ real estate industry in 2017 remains rosy after capping a first quarter performance marked by sustained expansion across all sectors. The Philippine real estate sector grows in parallel with the country’s vibrant economy, which continues to attract inbound investments and stays on as one of the fastest growing economies in the Asia-Pacific Region, according to leading real estate service and workplace solutions advisor Santos Knight Frank.

 

Growth is particularly evident in the IT-BPO sector, which continues to display resiliency. More foreign firms from countries like China, Qatar, Mexico, Israel, United Kingdom and Canada are eyeing to invest in the IT-BPO industry in the Philippines, according to reports during the first three months of the year. These are expected to further drive real estate growth in secondary cities outside Metro Manila.

 

“The country remains as the most attractive inbound investment destination in the region for IT-BPO companies which are eager to capitalize on the country’s favorable demographics, strong dollar, competitive labor cost and continuous infrastructure development. We expect the IT-BPO sector to sustain its upward trajectory especially as the government paves more growth opportunities in areas such as Clark, Cebu and Iloilo through an aggressive infrastructure program,” said Rick Santos, Chairman & CEO of Santos Knight Frank.

 

“During our recent business mission to the West Coast especially in Silicon Valley, we received strong interest from Silicon Valley companies to locate and expand BPO and IT offices to the Philippines. We continue to work with our partner Knight Frank and U.S. affiliate Newmark Knight Frank to leverage on the Philippines’ competitive demographics and bring in more BPO and IT companies through our market-leading global workplace solutions group,” said Santos.

 

Santos Knight Frank is part of the Knight Frank network, which operates from more than 400 offices in 60 countries across the globe – this includes a strategically important partnership with Newmark Knight Frank (including the market-leading West coast and Silicon Valley operations of Newmark Cornish & Carey) in the United States. Newmark Knight Frank has brought many of the Silicon Valley companies, ranging from startups to billion-dollar global players to the Philippines.

 

With the government’s thrust of “Build, Build, Build,” investors convey an enthusiastic viewpoint that the country will surpass expectations. According to the 2017 ASEAN Business Outlook, the Philippines registered the highest satisfaction sentiment with 77%, followed by Vietnam with 72% and Myanmar with 70%. Furthermore, 70% of the respondents plan to expand their operations in the country, 55% project an increase in number employees and 79% forecast an increase in company profit.

 

Office

 

During the first quarter, overall vacancy and rental rates were stable despite additional office stock coming from newly completed developments. Among the central business districts, Makati’s weighted average lease rate grew by 11.23% to PhP 1,250.86, while Bonifacio Global City’s is now at PhP 950.71 from PhP 908.78 same time last year.

 

Along with new office concepts such as “Co-working Space”, additional stock will allow Metro Manila to accommodate business expansion and new entrants in the market in the coming years. In the Makati CBD which has more than 3 million of gross leasable area (GLA), over 510,000 square meters of GLA is scheduled to be turned over until 2022. Vacancy rate at BGC is at an impressive rate of 0.43% amidst new building turn overs, while vacancy slightly decreased in Quezon City and Bay Area to 3.73% and 0.14%, respectively. On the other hand, Alabang received additional office stock of 54,445.48 square meters of GLA.

 

Retail

With a growing Filipino middle class supporting the Philippines’ consumption-based economy, the growth of the retail sector has seen developers such as Vista Land and Double Dragon ramping up their portfolio through massive expansion of their retail business. The retail component of Double Dragon’s Meridian Plaza mixed-use development and other Ayala Malls namely Vertis North Mall, Park Triangle Mall and Cloverleaf Mall are some of the upcoming retail developments to watch out for. Together with expansions of Robinsons Galleria, Festival Mall and SM Mall of Asia, upcoming retail spaces sum up to approximately 835,000 square meters in 2017 alone.

 

Retail openings under food and beverages, ranging from fast food and restaurants to coffee shops, accounts for about 63% of the total retail openings in the first quarter of 2017. This is followed by clothing and apparel with 26%. The remaining percentage is distributed among homeware, consumer electronics, department stores and other consumer services.

 

In turn, the growth of retail has spilled over to the industrial sector, where storage and logistics have become a new area for expansion among developers.

For further information, contact:

Ms Celia Rocamora, Operations Director
celia.rocamora@santos.knightfrank.ph
+63 2 752 2580

Mr Paolo Abellanosa, Corporate Communications Officer
paolo.abellanosa@santos.knightfrank.ph +63 2 752 2580