Residential segment remains vibrant

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According to Pinnacle Real Estate Consulting Services Inc.’s market insight, the Philippines s real­estate market con­tinues to perform well. It is sup­ported by Oxford Business Group’s (OBG) “The Report: Philippines 2014,” which says the outlook for the real­estate sector in the Philippines is looking positive, as the demand for quality housing is expected to remain high on the back of a strong economy and renewed investor con­ fidence. And Colliers International Philippines Research said the de­mand is so high that even with new projects coming up, vacancy levels in prime districts should remain below 5 percent for the next two years.

In fact, based on Urban Land In­ stitute and PricewaterhouseCooper’s research “Emerging Trends in Real Estate 2014,” Metro Manila ranked fourth—from 12th place last year— among Asia Pacific’s most attractive markets in real­estate investment and development prospects, particu­larly in the residential, office and retail segments.
This favorable ranking was at­tributed to the country’s fast ­grow­ing economy, increasing popularity among multinationals seeking out­sourced services, young demograph­ics and strong capital inflows from overseas Filipino workers (OFWs), among others.

However, this is true not only to Manila, but to the rest of the country. As OBG puts it, cities across the Philippines are getting a face­lift. “With the country riding high on a wave of investment­rating upgrades, this growth—as far as the real­ es­tate and construction sector is con­cerned—has only just begun.”

“No longer is the Philippines an underestimated market,” said CBRE Philippines Chairman and Founder Rick Santos. “We expect 2014 to be an unprecedented year in real­ estate investments for the country.”

Among the property segments, the residential market remains the most vibrant, with high ­end and luxury residential properties seen as promising. According to CBRE Philippines Senior Director for Research and Consultancy Jan Paul D. Custodio, this is driven by the restrictive cooling measures in China, Singapore, Hong Kong and Malaysia, giv­ing potential buyers the incentive to go into these types of housing here.

High­end housing
A study conducted by the Chamber of Real Estate and Builders’ Associa­tions Inc. (Creba) said the residential market continues to be very active. The high ­end segment, it cites partic­ularly, remains to be strong, and many top brands have been introducing prod­ucts catering to the rich and famous.

Currently rents for high­ end condominium units are well above P200.000 per month, depending on the floor areas. Rents in the villages, given the very limited supply, range from P300,000 to P500,000 per month.

The OBG also cites the Philippines as among those with the lowest office ­lease rates in Asia, with a rough $26 per square foot in the Makati Central Business District (CBD)—the most effective in Asia as compared to $179 in Beijing, $102 in Singapore and $50 in Jakarta. This is a contrib­uting factor to the increasing foreign businesses entering the country, which results in a greater number of expatriates entering the market and demanding luxury residences and condominiums in CBDs.

CBRE says the prime areas for luxury residential projects are gen­erally located within the business districts of Makati and Fort Bonifa­cio—the districts that attract high­ income and expatriate populations, the primary drivers of the high­end segment in the country.

According to Colliers Interna­tional Philippines Research, upcom­ing housing supply in the Makati CBD and Bonifacio Global City is expected to account for almost 60 percent of fresh supply by 2017. The study fore­ casts an average of 5,880 residential units will be completed each year un­ til 2016, leading to a total supply of over 78,000 units in CBDs covered by its research.

CBRE said the residential sector, particularly the high­end segment, will experience growth, as the neigh­ boring countries will experience re­ strictive cooling measures in their economies. This will accelerate the de­velopment of luxury residential properties in Bonifacio Global City, Makati, Boracay and other high ­end development areas.

However, with all the prime ar­eas already divided among top developers, the lack of areas to develop will lead developers to focus more on land­banking activities.
Pinnacle explains that the prevail­ ing low­ interest rates and high liquid­ity allow both developers and buyers access to various financing schemes. Developers continue to tap the avail­ ability of financing from banks, which assures them access for funds for land banking and complete ongoing residen­tial projects. This high ­liquidity regime, likewise, gives their projects a better likelihood of being sold, as this would open their units to a larger market, lo­cally and internationally.

Midmarket and affordable segments
The midmarket is humongous and can be cracked with the prevailing low interest rates and high­ liquidity regime, said Pinnacle Director for Research and Consulting, Jojo Sa­las. Until 2019, residential inven­tory is seen to hit 176,610 overall, of
which 96 percent, or 169,820 units, are midrange, and only 4 percent, or 6,790 units, are in the premium level.

While the growing number of expatriates is causing waves in the high ­end housing segment, the coun­ try’s young population is seen as a key demand driver in the lower­end segment, as newly employed profes­sionals move out of their family homes and seek their own indepen­dent living space.

The business process outsourcing industry, with its enormous growth in the recent years, has also been influencing the movement of the real estate industry, not only in terms of office space, but also residential projects.

CBRE said the shifting work schedules of the industry involving young professionals has caused the employees to rent or purchase con­ dominium units or apartments near their workplace because they find it safer and more convenient.

Likewise, OFWs– many of whom already reaching “maturity” for working more than 20 years abroad, according to Philippine Allied Chamber of Real Estate Brokers and Licensed Salesmen Inc.– have shown interest in purchasing condominium or housing properties for investment or personal use.

The Bangko Sentral ng Pilipinas also said 30 percent of OFW remittances are targeted for real estate investments.

Affordable housing also became more affordable to the mass market. Since the mid-and low-end markets belong to a big segment with tight competition, a lot of players are competing to produce the optimum products at the lowest possible monthly amortization.

Looking ahead
The OBG notes concerns that in­ creasing property prices could create a bubble and drive up inflation. The International Monetary Fund even warned the government of a “domestic asset­price bubble,” following the orga­ nizations data. This showed that the year­on­year increases in Philippines property prices since 2011 were higher than those in Indonesia and Singa­ pore. It noted with alarm that nominal prices of high ­end residential proper­ ties rose 8 percent annually, with rents increasing more than 15 percent.

Still, the residential sector – from the high end to the affordable ones – remains in step with economic growth.

Creba reports the midmarket is very competitive and location­-specific, and the demand for affordable and socialized housing has been north of 3 million. The marketing, however, is based on volume and highly sup­ ported by a number of government agencies, and the margin per unit is relatively lower.

Top property developers say va­cancies in premium residential and office space in prime business dis­tricts are likely to remain scarce in the years ahead.

By: Janica Monick Riego, Business Mirror, March 26, 2014

Regent Parkway

To all the administrative, security and management personnel at Regent Parkway:

I’d like to take this opportunity to THANK YOU sincerely for all your hard work.Every day we come home to clean, well maintained and safe building, and it is thanks to the contributions of each and every one of you.

I’ve had the pleasure to be a tenant of this building for the last couple of years, and I have never, ever had a single problem, not ever one. Everything is managed with the utter most professionalism, and many times we take that for granted. I know that it doesn’t happen by magic, but because of the effort from each and every one of you.

Unfortunately, I am being relocated to my home country, reason for which I will stop living here by the end of the month. Believe me, if it was up to me, I would never leave; since my stay here has been very happy and fulfilling.

I’ve had the opportunity to live in many places, but the upkeep and operation in this building, together with the warmth from every member of the personnel, are unparalleled.

I didn’t want to leave without sharing with you my appreciation for all you have done for me; your friendly smiles, the cheering in the early mornings when I drag myself up for a run, making me feel safe and taken care of, but mostly, for taking an otherwise ordinary job and making something extraordinary out of it.

I wish you all the best and thanks again.

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