After Bonifacio where is the new CBD?
Malaya Business Insight
21 March 2013
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.