Emerging Trends in Real Estate – Asia Pacific 2017
The Philippines has attracted positive comment for the last several editions of this report, with a vibrant economy led by a booming BPO market and strong remittances from overseas workers.
DECEMBER 4, 2017
Today, the fundamentals appear as strong as ever. Demand is resilient, with many buildings pre-committed before completion. Vacancies remain low, and office capital values and rents continue to show good growth. Meanwhile, the logistics industry, traditionally a laggard in the Philippines, is also seeing accelerating demand based on increased consumer sales.
Some clouds are on the horizon, however. Overseas remittances are not expected to maintain current levels of growth due to economic problems, both globally and in particular in the Middle East, where most expatriate Philippine workers are based. At home, meanwhile, according to one Manila-based developer: “The market is reaching a very heated point in the property cycle after several years of strong growth. The challenge developers will face next year is sourcing for land, so it will become harder to find new development opportunities.”
At the same time, the transition to the new administration, together with its announced policy shifts, has raised concerns among investors, although probably more so within the Philippines itself than among foreign real estate fund managers, for whom the bigger issue is actually placing capital into the local market. As one fund manager said: “I would still love to go in and do some office in Makati, but it’s a very tightly held market and it’s difficult to find institutional-quality partners as well.”