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Despite the large amount of office stock set to come online in the next two years, there is no threat of a supply bubble forming, according to a real estate analyst.
During the Asia Real Estate Summit 2016 at the Mariott Grand ballroom in Pasay City, Jones Lang Lasalle Philippines National Director Sheila Lobien told businessmen that that there is no threat of a bubble forming in the country’s office property sector despite the large amount of supply expected to enter the market in the coming years.
Based on data from the real estate services firm, approximately 910,100 square meters of new office space is set to enter this year alone.
“Office demand has been continuously growing since 2012 due to the Business Process Outsourcing/Offshoring & Outsourcing sector,” Lobien noted in her presentation.
Lobien said there is no bubble forming in the real estate market since the supply is being absorbed.
“There is no bubble there [office market] because the supply that enters is absorbed. Rental rates are increasing at a steady pace, by 5 to 6 percent. We’ve seen that in the past six, seven years,” Lobien said.
One of the factors driving the fast take-up of office supply is the pre-commitment trend the market has been seeing, according to Lobien.
Lobien also noted that 48 percent of new office stock set to come online this year has already been pre-leased.
“Market remains favorable to landlords, and tenants continue to consider precommitting to space to mitigate higher real estate cost,” Lobien noted in her presentation.
Lobien described the current state of the office market as “healthy.”
“It’s a very healthy office market,” Lobien said.
This article was originally published on Manila Times.
National Director, Landlord Representation