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From BusinessWorld Philippines
2 January 2012
Property growth expected to continue
THE PROPERTY SECTOR will continue to grow this year, particularly in terms of commercial office space, with demand expected to remain resilient despite global economic uncertainties, industry consultants and a developer said in separate interviews last week.
Consultancy firm Colliers International Philippines is sticking to its projections in the third quarter last year in which it said new supply of office space for 2012 would reach 385,154 square meters (sq. m.), 8.48% more than the 355,057 sq. m. for 2011.
“So far, we are lucky enough not to feel the effect of several global uncertainties like the Euro zone crisis, Saudization, [and problems in the] US…,” Paul Vincent R. Chua, associate director and head of advisory at Colliers, said via e-mail toBusinessWorld.
Demand will continue to come from business process outsourcing (BPO) firms, which are expected to expand further, Mr. Chua said. “Uncertainties in developed economies make it better for those companies to outsource their back office or call centers to developing economies like the Philippines,” he explained.
Jones Lang LaSalle Leechiu (JLLL) expects growth across the board.
“Considering lower projected Philippine economic growth for 2012 and various unresolved economic problems in the global scene, we forecast, in general, still conservative growth for the property sector (commercial, residential, hotel) driven by sustained growth in the O&O (outsourcing and offshoring) sector and OFW (overseas Filipino workers’) remittances,” said Claro dG. Cordero, head of research and consultancy at JLLL.
“There were no changes in the sources of demand for the commercial office and residential spaces, as compared to the last couple of years.”
Commercial Grade ‘A’ office stock in Metro Manila is expected to grow by around 15%, while residential condominium supply is estimated to increase by 25-30%, Mr. Cordero said.
JLLL, in its November Philippine Property Market Monitor, noted that O&O companies were looking to expand to “next wave cities” and even more urban areas. “The outlook looks good for the local O&O industry in the upcoming years, with the Business Processing Association of the Philippines (BPA/P) projecting a 20% growth rate from 2011-2016,” JLLL said in the report.
BPA/P’s “Philippine IT-BPO Quality Roadmap” had also projected that the industry could earn $25 billion annually by 2016 and employ up to 1.3 million.
This road map could translate to roughly four to five million square meters of potential new office space, Colliers said.
While expecting growth overall, Colliers, however, is projecting slowdown in new supply of residential units.
Projected new residential supply in 2012 would reach 5,870 sq. m, 34.47% less than the 8,958 sq. m. projected last year, data from Colliers showed.
“We would see growth in the residential sector next year , more particularly in the low-cost to low-affordable segment which is still underserved by the supply that is available in the market,” Colliers’ Mr. Chua said.
“At the opposite of that spectrum, there would still be more luxury condominiums that will be available to serve the gap in that particular segment,” he added.
“For the residential condominium, it [will be] primarily driven by a good source of OFW-funded real estate purchases and BPO explosion.”
He noted that there are still not enough houses to plug the backlog, which is estimated at more than 418,000 units.
SM Development Corp. (SMDC), the property arm of the SM Group, said it would continue to tap into the OFW market given strong remittances.
“Considering that housing is part of basic human needs and remittances remain strong, we have sent people abroad to tap into the OFW market,” Jose T. Gabionza, SMDC vice-president for business and development, said.
“Our international market has gone up to 13-15% of an expanded pie from 10-12% and it will continue to be a growing market for us,” Mr. Gabionza added.
Latest available data from the Bangko Sentral ng Pilipinas (BSP) showed that overseas Filipinos sent home $16.53 billion from January to October 2011, 6.97% more than the $15.46 billion recorded a year earlier.
OFW households allotted 11.4% of remittances in purchasing a house, data from BSP’s fourth quarter Consumer Expectations Survey showed. — Judy Dannibelle T. Chua Co and Karen Joyce Q. Ang