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Hot spot for investors: Firms unload properties to reinvest in core business

​​Metro Manila is increasingly becoming a real estate hot spot for global investors seeking property to cash in on the country’s projected economic growth, corporations seeking to raise capital by selling their real estate, and other industry players.

JLL associate director for Capital Markets Gerard de Guzman discloses that 2014 witnessed a surge in global real estate investment across Europe and the Middle East, the Americas and Asia Pacific with US$710 billion invested. He cites a 2015 JLL report that states: “With abundant equity, availability of debt and the continued low interest rate environment, global real estate investment volumes are expected to continue to rise.”

Metro Manila and some provinces have had their fair share of high net worth individuals, foreign investors, Philippine conglomerates and global companies seeking as well as selling properties across almost all asset types in the past two years, according to de Guzman. Prior to that, only local investors dominated real estate activities. 

“The Philippines’ growing economy, Asean integration, the liberalization of the banking sector are among a confluence factors that have put Metro Manila and some areas of the country onto the global investment radar,” he says.

A growing trend for companies not engaged in the business of real estate is to liquidate their real estate assets and reinvest it in their core business, he says. This is supported by a recent JLL Global Corporate Real Estate Trends report which discloses that 40 per cent of survey respondents felt increased pressure from senior leadership to raise capital through the real estate portfolio.

Governed by strict corporate governance laws, these firms have partnered with JLL in the Philippines because of the latter’s adherence to the same values and principles, according to de Guzman. JLL has assisted these firms by helping them review which of their properties are core and what are not, what could be vacated or relocated or is only needed short term. Its assistance extends to creating a strategy based on options that create the most value and the most appropriate level of flexibility and can be executed in the Philippine market.

For local players with cash earned from their core businesses in non-real estate endeavors here and out of the country, investing in office developments including office towers in Makati and BGC have been a way to diversify their holdings. For a number of them, real estate investments have likewise created higher visibility and greater prominence for their enterprises. Equally active in seeking investments are companies from mature Asia Pacific economies limited by few opportunities in their home markets.

But whether they are listing a property or inquiring about a possible acquisition, most realize that “the Philippines is currently offering a once in a cycle opportunity to make significant gains,” says de Guzman.

This article was originally published in Malaya.