Philippines’ property boom shows no sign of slowdown

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Christine Ong

Channel News Asia.com

28 January 2013

http://www.channelnewsasia.com/stories/economicnews/view/1250702/1/.html

MANILA: A property boom in Metro Manila, described as the best in two decades, has pushed construction in the Philippines to its highest growth in at least six quarters.

The Philippines is experiencing a property boom like no other with developments covering office buildings, housing projects, hotels and new shopping districts.

This is all being fuelled by confidence in the Philippine economy which grew at a notable 7.1 per cent in 2012.

With the Philippine economy growing at an impressive pace, experts said there will be no slowdown in the demand for real property market as the country rides on strong macroeconomic fundamentals and investor confidence.

CBRE Philippines’ chairman Rick Santos said: “We are seeing a very strong government. The Aquino administration is doing a very admirable job. The strong leadership and a strong cabinet have been reflected on the confidence of the foreign investors. A lot of countries around the world now are getting investment downgrades. In the Philippines, we are seeing investment upgrades so that is very positive. The Philippines is becoming this overnight success that took 20 years.”

Property developers are now enjoying brisk sales with vacancy rates falling to its lowest on record.

In some cases, pre-leasing for office spaces are committed for the next two years.

The challenge now experts said is how to cope with the unprecedented success.

Jose Antonio, founder and chairman of Century Properties Group, Inc, said: “The challenge is actually not only for us as a company. The challenge for our country is how to sustain this growth. How do we sustain it? It is really to plough back all the income of both the private sector companies and the government into sustainable projects and relevant projects.

“For example, it is very important for the government to expand our infrastructure. There is a big need and we know it. (The government needs) to hasten the infrastructure program of the government.”

The government has allotted a record budget of over US$9 billion this year to upgrade the country’s roads, ports, bridges and airports.

Industry experts believe the aggressive infrastructure spending will further real estate growth in the country.

Orion Support Incorporated (OSI)

Dear Rick,

Following up from my initial request to you for support in finding a new office location for our company, Orion Support Incorporated.   Well, we moved in to the LTA Building on Perea Street, fifty meters or so from Paseo de Roxas this weekend, only a 4 minute walk to AmCham and under excellent terms.

While I think you assigned both Morgan Mcgilvray and Sherdil Rana to support our original request; as you know, Morgan was very tied up with his wife giving birth during the period we identified this location and negotiated with the landlord, Mr. Mike Arroyo. Yes, the former First Gentleman. But in my short interaction with Morgan, I can see that he is a solid, young professional.

With regards to Sherdil, I want to tell you that with 35+ years of interviewing hundreds and hundreds of individuals, I was impressed with his professionalism, focused support and “can-do” attitude  from the point of identifying our potential office space, and through the negotiation stages prior to the signing of our 6 year contract.  I was impressed with his considered opinions, insightfulness with regards to Philippine business culture and his sage advice related to our strategy in the negotiation process.  Sherdil was able to negotiate a rental rate per square meter about 150 – 200 pesos less than the going rate in this area, and with only a 7% increase after 24 months. Add to that, he secured for us three parking slots at no additional cost, two months security deposit versus the standard three, and two months advance rent to be applied to the front end of our contract versus the back end as is the case in most rental contracts. And, he got the landlord to repaint the entire office with three coats of mildew resistant paint at their expense.   But best of all, we were given a 6 year lease, with only having to give two months notice and forfeit only our two month security deposit to move out anytime with no additional penalty!

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