‘Phl property market in best shape in 20 years’

MANILA, Philippines – The Philippines is now experiencing the best real estate market in the last 20 years, real estate and advisory firm CBRE Philippines said yesterday.

CBRE Philippines chairman and CEO Rick Santos said the local property market is turning green into gold, and that the country is experiencing democratization in the housing sector – from a nation of renters to owners – based on low interest rates and financing schemes.

He also pointed out that the country is no longer the sick man of Asia and is now the sweet spot for investors. “All eyes are now moving from the BRIC (Brazil, Russia, India, China) economies to TIP (Turkey, Indonesia, Philippines) economies. The Philippines is becoming the lifeboat for many US and European companies that need to outsource in order for their businesses to survive and actually preserve jobs back in the US and Europe. And as the outsourcing and offshoring sector gains strength in the country, we see more occupiers and developers prioritizing flight to quality, with green buildings becoming more the norm than the exception,” he said.

Santos likewise noted that pre-leasing is back while the office sector goes from strength to strength, with a surge of pre-leasing commitments in the central business districts. Green buildings, he added, are future-proof investments.

CBRE said in its mid-year briefing that the residential industry continues to feed on strong demand from a broader market in 2012 and onward.

It noted that bank lending rates are still on the downward trajectory, sustaining the liquidity in the financial system. Demand in the residential sector remains strong due to the increasing affordability of funds for housing acquisitions. The liquidity in the market, it said, enables developers to provide more affordable payment terms to buyers. Low cost of borrowing are likewise spurring development expansions in the residential/housing industry.

CBRE also explained that the single-digit mortgage rate has democratized the housing ownership in the Philippines, allowing Filipinos to buy rather than just being renters for life. In most cases, monthly rent for a typical household dwelling in Metro Manila are now at par with house and lot or residential condominium products now available to a broader market base.

It said that the modern Filipino household are becoming condominium dwellers attune to urban living within a live, play and work environment. “Thus, the demand for affordable condominium unit continues to grow year on year. The reason most property developers are shifting to the development of reasonably priced condo units around the Metro is to cater to the growing population who are empowered by the economy to own their dwelling place,” it explained.

CBRE in its report likewise said the Philippine office sector remains resilient despite the global economic slowdown.

It pointed out that in the major business districts, where office space requirements are on a steady uptake with no signs of a slowdown, demand is catching up with supply.

Average occupancy rates during the first quarter hovered at 96 percent. “The demand from the sustained expansion of the outsourcing and offshoring industry and the limited tenant turnover continue to put pressure on the already tight supply situation. Although new supply of traditional and BPO office space is scheduled to come online in the second half of the year, it is not expected to do much to alleviate the supply situation,” it said.

It added that already, about 293,000 square meters of the anticipated new supply, about 232,000 sqm have been precommitted.

“The limited supply continues to put an upward pressure on office lease rates. Despite the rental rate increase in the second quarter of 2012, Metro Manila is still the most cost-effective office destination in Asia, outperforming 18 other CBDs,” it said.

CBRE also said that the surge in green buildings will support the robust growth of the country’s property sector. “The benefits of going green are evident not only to the landlords but also for tenants/occupiers,” Santos said.

He added that Fortune 500 companies, multinational corporations, and even local firms now consider green initiatives as pre-requisites in their day-to-day maintenance and operations.

Meanwhile, developers are becoming much keener in meeting these demands and are seen to be more willing to incorporate “green” features into their buildings, making them cheaper to occupy. –Mary Ann Ll. Reyes (The Philippine Star)