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.

Adchemy

Yesterday , we concluded the handover of our unit located on the 27/F of Philamlife Tower. It was a relief that we finally have access and can proceed with our minor refurbishments. Finally an official announcement can be given to our Engineers who really deserve a better facility that they can call their own.

Much of this good news and feelings of self-achievements of getting this unit would not be possible without your help and that of you most gallant employees, Mr. Francis Bautista and Mr. Philipp Llave.

Initially our head office in San Francisco was not in favor to get our own unit and moving out of Regus because of the initial capital outlay it represented. Eventually we were granted approval to start the search on the condition that it would be a tail-end of an existing lease, with no capital outlay needed for fit-out, cabling and furniture on our part. Knowing what the real estate market in the Philippines is like and our prior experience in finding office space, the situation proved very challenging, if not frustrating for us.

But with their professionalism, persistence and unique knowledge of the market, Francis and Philipp were able to find us a unit that fit the specifications of our head and negotiate a deal that was beneficial to us. To sweeten the deal further, the space they provided is just a few floors away from our existing office thus making it an easier transition for us.

Bottom line, what I am trying to say is “THANK YOU” to both most especially to Francis who’s been very instrumental on all my needs in terms of office spaces.

Keep up the good work guys!

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