Real estate sees upbeat and positive growth potential for 2019

Real estate sees upbeat and positive growth potential for 2019

BusinessMirror Leony Garcia February 27, 2019

With a growing population, and stable consumer and labor demand, a positive outlook for the real-estate landscape is seen in the Metropolitan regions in the country. Infrastructure projects and government initiatives are key factors necessary to sustain these growth expansions. In around five-year time, these expansions are expected to produce significant positive performances.

 

This is according to Prime Philippines, a property consultancy and advisory company headquartered in Quezon City. The youngest, yet fastest, in the industry, Prime was founded in 2013 by young entrepreneur Jettson “Jet” Yu, whose goal at the age of 23 was “to challenge tradition and to create better real-estate solutions.”

 

The company has since grown to provide extensive consultation services, as well as cost-efficient management strategies backed by top-notch research that will yield a maximum profit for commercial properties. It now has a satellite office in Davao City, as it aims to make Davao the central business district of Mindanao. Yu and his millennial team recently meet industry stakeholders and the media to present the company’s “Philippine Real Estate Outlook 2019.”

 

Accordingly, with the ongoing infrastructure projects of the government, the Build, Build, Build (BBB) program, which is expected to be completed or partially operational by 2020 in developers are now on track getting and developing the most strategic locations in and out of Metro Manila.  Likewise, some of the key infrastructure projects, such as the BGC to Ortigas road link, Nlex-Slex connector, Metro Manila skyway Stage 3, MRT Line 7, Mega Manila subway, Manila bus rapid transit (Quezon Avenue and EDSA) and the unified common station, providing connectivity from Metro Manila to nearby provinces, would drive development outside. Decongesting the Metro, it would help develop regional urban centers in Central Luzon in the process.

 

An example of this regional growth center is Pampanga. Already, several township developments have gathered around some of the key infrastructure projects passing through the province—Subic-Clark railway, Manila-Clark railway and PNR North railway —like the 1,800-hectare Alviera by Ayala Land and Leoncio Land, the 35.6-hectare by Megaworld, 40-hectare The Infinity by ACBI Realty, the 117-hectare Clark Global City by the Global Gateway Development Corp.

 

Aside from Pampanga, Cavite and Laguna are also considered for urban expansions where affordable housing and towns are expected to rise. Some existing projects include Ayala Land’s Evo City and Altaraza, Santa Lucia Land’s Colinas Verde, Megaworld’s Southwoods and Profriends’ Lancaster City.

 

Luzon has the greater Metro Manila as the center for trade and business activities. Likewise, the Visayas and Mindanao have Metro Cebu and Metro Davao.

 

Cebu City, which has long been the center of development within the Visayas region, owing to its central business parks—Cebu IT park, Cebu business park, and the south road properties (SRP)—continues to attract developers, investors and business locators. For instance, Mandaue City, which already has the 191-hectare north reclamation area housing SM City Cebu and Robinsons Galleria, is coming up with a 17.2-hectare Gatewalk Central joint venture development of Ayala Land and Aboitiz; and 20-hectare Mandani Bay joint venture of Hongkong Land and Taft Property ventures. With the upcoming connecting bridges to other Metro cities, Mactan has also its share of development-especially with the upcoming properties, such as The Mactan Newton Ayala Land’s integrated resort development and the Seagrove-Megaworld’s township development with a beachfront.

 

Meanwhile, Davao City is expanding within its urban core in the downtown area. The most progressive area in this city at the moment is JP Laurel Avenue, where most large developers concentrate such as Ayala Land, Megaworld and SM. But with the development of infrastructure railways and road networks, such as the Davao Expressway, Davao bypass road, Davao coastal road and urban mass transit, the general connectivity within the city is expected to improve and increase business confidence.

 

Despite the extension of martial law in the region, most Davaoeños find the general situation “normal” and “regular” with businesses operating as usual. In fact, the tourism sector reverted back to an even more robust performance after months under martial law. Several foreign investors have expressed their interest in expanding their business in the city. Current large-scale developments on the rise outside of the stretch of HP Laurel includes DMCI’s Verson Parc, Cebu Landmaster’s The Paragon Davao and Davao Global Township. Lastly, with the plan of connecting Samal Island and the city, more developments, particularly residential projects, are seen to expand to this underutilized area.

 

The massive, nationwide BBB program, the first to be held in the Philippines for the longest time, is expected to boost the local real-estate sector, according to Prime Philippines. The infrastructure program opens up new areas for property development.  The continuous infusion of overseas Filipino workers’ investments in housing units, plus the rising business process outsourcing (BPO) industry, real-estate companies can look forward to a boom starting this year.

 

Prime Philippines also sees the expansion of the following industries:

 

Online gaming operators, Financial technology and BPO. The online gaming operators in The Bay area have become the primary growth drivers for retail businesses in the area. However, online-gaming space demand is still seen to sustain the general office-space, market in the short-term-driving the operators to look for bulk spaces outside Metro Manila. Pampanga and Cavite have become primary choices for the operators.

 

With the continuous growth of businesses in the financial technology industry in the Philippines, office space from as small as a serviced office to, whole office floors are seen to feed the remaining available supply in business districts. With these co-working spaces are expected to perform even more in 2019.

 

Strategic expansion of large retail mall developers. SM Prime Holdings has expanded outside Metro Manila on its last 10 mall ventures with 17 more until 2020, with SM Center Ormoc established in 2018. For 2019 large retail developers have also targeted developing cities outside Metro Manila with Davao as common denominators among them.

 

Continuous growth of the e-commerce industry, demand for storage and industrial warehouse. The e-commerce industry in the Philippines gained traction in 2010 with the increase in popular retail e-commerce platforms, such as Lazada, Shopee, Zalora, Ebay and Kimstore. With more coming, warehouse demand from these companies and other logistics firms are expected to pick up in 2019. However, most Filipinos still prefer traditional commercial centers that provide lifestyle experience. Therefore, the e-commerce platforms only serve as a complement to the actual retail business and are expected to affect only small-scale retail locators.

 

Asian fusion restaurants to top inline space demand. As the millennial market reigns with the rise of restaurants such as the Korean barbecue, the trend continues for 2019. There would be more space demand in secondary business districts in Metro Manila, such as Quezon City, San Juan City, Mandaluyong City, Malate and Pasig. International food concepts shall, likewise, continue to flourish with the Filipinos’ capability for franchising by tying up with retail development giants in the country.

 

Demand for the residential condominium to further increase. The Bay area had the largest share of residential space demand coming from China-based gaming businesses in the area. Additional residential developments are in the pipeline in Bonifacio Global City and Makati City amid rising prices. Quezon City had the largest increase in average capital values driven by the addition of luxury condominium units from large developers in Vertis North.

 

Shares living spaces to gain further steam. Serviced apartments and dormitories are expected to hit the market in 2019. Targeting the working population of Makati, BGC, Ortigas and The Bay area, these shared living spaces are expected to expand considering that majority of the workers in these CBDs come from the north as far as Bulacan.

 

MICE to drive hotel sector in business districts. Aside from tourist destinations, various business districts are all set to have an influx of both domestic and foreign arrivals driven by meetings, incentives. Conventions and expositions (MICE) in the country with Clark emerging as the next primary MICE destination. The Bay area in Pasay City and Paranaque City is not left behind, and so is Davao City and other MICE destinations. The closure of tourist-magnet Boracay Island may have left significant impact of the tourism figures in 2018, but other tourist destinations were boosted to compensate for the target deficit.

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