Philippines: Best investment hotspots

Opportunities beckon in the Philippines property sector with the economy growing by 6.1 per cent in 2014 and the government aiming for a growth rate of 7-8 per cent this year. With GDP growth more than 6 per cent for a third consecutive year, many real estate companies anticipate confidence will continue to rise.

 

The US-based Colliers International, a global commercial real estate company, expects this growth to continue throughout this year, as capital invested in infrastructure projects and strong domestic demand continue. By the end of 2015, it’s estimated that more than 8,000 new apartments will be completed in Manila, with 31,000 expected over the next three years. Many property companies anticipate rents and resale prices will rise while demand remains strong.

 

Residential market

Income from overseas Filipino workers and money generated through the business process outsourcing (BPO) industry is driving the residential market, with purchases of apartments in Makati City doubling since 2014, according to CBRE, a commercial real estate and investment services firm.

 

Now is a good time to buy, says Jacqueline van den Ende, Managing Director, Lamudi Philippines. “Mortgage rates are low, and yields for condos in the capital are quite good. Fierce competition for market share among developers means buyers and investors are having more options to choose from.”

 

Van den Ende says the majority of pre-sold condos coming up between 2015 and 2018 in the Makati Central Business District (CBD), Bonifacio Global City (BGC), Rockwell Center, Ortigas Center and Eastwood City, are studios and one-bedroom units. “These properties will cater to young urban professionals, thanks to the buoyant BPO sector.”

 

Yeli Camus, JLL agent for capital markets, concurs. “It is  still a good time to buy in 

newly launched projects in good locations and take advantage of the pre-selling prices and payment terms,” she says, while also recommending properties north and south of Metro Manila that will become more accessible with the development of road networks. “Condominium projects, exclusive villages in the CBDs — Makati, Ortigas and BGC — have the strongest demand for leasing.”

 

Van den Ende says Quezon City is the most popular city among online house-hunters, adding that Paranaque City is another sought-after suburb, as are upcoming developments and townships south of Metro Manila — Arca South in Taguig, and Alabang West and South Park District in Muntinlupa.

 

Commercial

Office stock in Manila is growing steadily, fuelled by demand in a steady economy. “Commercial properties, especially offices, are proving to be quite buoyant thanks to strong demand and low supply,” says Van den Ende. 

 

“Plenty of office towers are in the works in BGC, and many observers agree this CBD will eventually become Metro Manila’s second-most important area — after Makati — if not the most important.” 

 

Companies moving to BGC include JC Morgan, HSBC, Procter & Gamble and Unilever. Over the next four years Colliers predicts the BGC office stock will reach 1.97 million sq m, an average increase of 250,000 sq m annually. Other popular commercial areas are Makati CBD, Alabang, Quezon City, Ortigas and the Bay Area.

The number of companies in the Philippines providing outsourcing services is rising (revenues up 18.7 per cent from last year), which is boosting demand for rental offices. The BPO trend is attracting investment from foreign IT companies and employing one million Filipinos. “The strong demand for office space by the BPO industry is generating good yields for both office and retail property owners,” says Henry Cabrera, Head of capital markets at JLL.

 

Outlying regions

Areas outside of Manila worth investing in include Cebu. “It is always a safe bet: buoyant economy, huge population and a unique metropolis in which white sand beaches and resorts are just minutes away,” Van den Ende says. “Bacolod and Iloilo are exciting growth cities in the Western Visayas region, where developers are building mixed-use townships.”

 

Van den Ende also rates Tagaytay and Baguio, in south and north Luzon respectively, as popular spots. According to CBRE, Laguna in south Luzon and Pampanga in central Luzon are also reliable investment areas. ■