After Bonifacio where is the new CBD?

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Malaya Business Insight

21 March 2013

http://www.malaya.com.ph/index.php/special-features/property/26973-after-bonifacio-where-is-the-next-cbd

Bonifacio Global City is emerging as the next premier business district in Metro Manila and may supplant Makati as the premier financial hub, analysts said.

The emerging business district is  rife with developments; transactions eclipsing those in Ayala; construction activities robust; supply growing  and land prices increasing.

According to David Leechiu, Jones Lang LaSalle country manager, the volume of transaction in Bonifacio Global City is 10 times bigger than transactions in Makati.

“In fact, there hasn’t been an asset traded on Ayala avenue for the last seven years. I have always said for the last six years that Bonifacio Global City is the safest place to invest in real estate. Land prices there are 30 percent higher now than in Makati.,” Leechiu said.

Leechiu said major  corporations are moving to Bonifacio Global City and more would move there once the Philippine Stock Exchange opens in 2016.

“All the companies that are opening in Makati and Ortigas are now gonna find a home in Bonifacio Global City. The only thing that people are waiting for now are the hotels,” added Leechiu.

The transformation of the former airbase has been very remarkable since its privatization during the Ramos administration.

Fort Bonifacio’s  development was stalled in the aftermath of the 1997 Asian financial crisis only to bounce back to  become the premier destination for office space locators, particularly business process outsourcing companies  and those that are affiliated with multinational conglomerates.

Since its development changed hands to the Ayala Land group from the original winning bidder, the Metro Pacific group, Bonifacio Global City has become one of the leading destinations of BPO companies.

Jones Lang LaSalle earlier noted that Bonifacio Global City accounts for 41 percent of ongoing construction of  office space that would come on stream until 2015.

It added that Bonifacio Global City accounts for a significant percentage of the actual supply of office space of the 7.8 million square meters in the pipeline across districts.

CB Richard Ellis, another property consultancy firm, said occupancy rate in Bonifacio Global City is now  98.21 percent, with the average leasing rate at P600 per sqm, a 10.50 percent premium over the previous year’s average rate.

Of the five notable business districts in Metro Manila, Bonifacio Global City also corners the largest supply in the pipeline at around 700,00 sq.m., compared to the second largest, Quezon City, which has 300,000 sqm in supply.

“I think Bonifacio Global City (land prices) will go up 5 to 10 percent a year. There are so many transactions happening in the last three years, many properties have traded that had been sold three times after that in a span of three to four years. Every single land owner in Bonifacio Global City are no longer selling,” said Leechiu.

“It’s not like before that they will buy and flip it. Now they intend to build something for the next generation,” he added.

Manny Blas, Fort Bonifacio Development Corp. (FBDC) head for commercial operations, earlier told Malaya Business Insight that about 30 percent of the Bonifacio Global City’s 240-hectare total area has been sold to third parties, with about half of these in various stages of development and planning. FBDC is the development arm of the Ayala-Campos Group for Bonifacio Global City.

About a quarter of Bonifacio Global City’s land area remains with FBDC which has the option to develop using the original 15-year development plan of the property. FBDC also reserves the option of  developing it on its  own or under joint-venture arrangement.

As it is, migration to Bonifacio Global City continues that it may soon supplant Makati as the premier financial district, according to Leechiu.

“I think you will see a shift. There will definitely be a shift. Offices will transfer,” Lecchiu said.

Companies like  Coca Cola, . Philamlife and  Sunlife have moved in Bonifacio Global City.  Other foreign banks are going to join HSBC in the area.

“You’ve got Chinatrust which did the same thing. We will see more and more,” he added.

Other developments in the area include institutions like  the Singaporean embassy which moved from Makati CBD  in 2008;  the Leaders International Christian School of Manila, British School Manila, International School Manila, Manila Japanese School, STI College, and MGC-New Life Christian Academy.

The Shangri La Group’s new hotel, a 60-storey mixed-used landmark with 577 hotel guestrooms, 97 hotel residences and 96 luxury condominiums, is also scheduled to open in 2014.

“So the question now is where is the next Bonifacio Global City?” said Leechiu.

Bonifacio Global City was sold in  1995 to  Bonifacio Land Corp., a consortium led by Metro Pacific Corp. in what was called as the “deal of the century.” The acquisition price of P30.4 billion or  at P333,283.88 per sqm.

Metro Pacific sold its interest in Fort Bonifacio Development Corp., to the consortium of Ayala Land, Inc. and Evergreen Holdings, Inc. of the Campos Group in 2005.

Energizer Philippines

Dear Rick,

I’d like to thank you and your team – Joey Radovan and Morgan Mcgilvray in particular, for the assistance given to us during our recent Office Relocation process.
They were very well organized and helpful:

- Our site visits were conducted in a very timely manner and my management committee received clear and useful guidance on various aspects related to site selection –from what to look for in terms of building services, location, etc., as well as guidance on the discussion etiquette they should observe in order to safeguard the confidentiality of issues that could be valuable at the time of final selection and negotiation of the site.

- Both assisted us in the selection of the Office Design and Construction supplier; they were present in all the presentations and gave us objective feedback and opinions that helped my team feel more educated and confident about the decisions they were making.

- We also received guidance with various topics that arouse secondary to our office relocation, such as off-site document storage options just to name one example.

- They continued their liaison and support with the landlord and constructors throughout the process of negotiating and signing the lease, as well as during a very tight construction and relocation schedule during which a lot little (important) issues arise that must be solved swiftly in order to keep the deadlines.

The above is by no means a comprehensive list, and I’d like to extend our thanks to your team who supported Joey and Morgan in giving us such excellent service.

We are now pretty much settled in without any business interruption and with our colleagues quite happy about our new office and location; do come to visit us when you get a chance!

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