Know the POINT: Predictions, Opportunities, Insights, News & Trends
A Market Overview
The Philippine real estate industry has been steadfast amidst projected growth this 2019. Early this year, industry leader JLL sees a positive trajectory in the residential, retail, industrial, hospitality and commercial office real estate sectors. Based on JLL’s first quarter of 2019 preliminary report on Metro Manila Property Market Overview (PMO), several trends and opportunities are to have positive effects in the overall performance across all real estate asset classes in the Philippines.
For the residential sector, based on first quarter of 2019’s preliminary PMO, it maintained positive growth, adding an estimate of 5,400 units, closing 2019’s first quarter with a total supply of 343,700 residential condominium units in Metro Manila. The continuous growth is attributed to the completions of several residential condominium units from the mid to luxury segments in the cities of Makati, Taguig, Mandaluyong, and Paranaque.
The sustained growth in the residential condominium market is further supported by the continuous project launches of real estate developers. In JLL’s February 2019 Philippine Property Market Monitor (PMM) reported the soon-to-be-built Season Residences, a four-tower residential condominium in Bonifacio Global City (BGC) by Federal Land Corporation in partnership with Nomura Real Estate Development Co., Ltd., and Isetan Mitsukoshi Holdings, Inc. Its first tower is scheduled to complete in 2023. Meanwhile, real estate developer Megaworld Corporation is slated to build two residential properties within Westside City in Paranaque City: The Gentry Manor and Bayshore Residential Resorts.
The current year has also been positive to the retail industry with vacancy rates of shopping centers remaining low at 3.7% as of first quarter 2019. This is due to the robust demand for retail spaces by foreign and local brands. JLL has also reported continuous expansion of huge retail space providers outside Metro Manila such as Robinsons Land Corporation (RLC) and SM Prime Holdings (SMPH), through their respective mall brands showing spillover of retail investments in key areas.
Robinsons Land Corporation (RLC) recently opened Robinsons Place Valencia in Valencia City, Bukidnon covering 80,000 square meters (sqm.) of retail spaces. The RLC group is expected to construct shopping malls within the year in the areas of San Pedro, Laguna and Antipolo, Rizal, while expansion of the Robinsons Magnolia in Quezon City will continue for the rest of 2019. On the other hand, SMPH is set to add more retail spaces with the completion of SM MindproCenter Dagupan and SM City Olongapo Central, adding a total supply of 179,000 sqm. to current stock. Furthermore, SMPH will be expanding an additional 46,000 sqm. in its SM City Baguio and 32,000 sqm. to its current SM City Fairview retail area.
In recent periods, investor interest in the industrial sector of the Greater Manila Area (Tarlac, Pampanga, Cavite, Laguna and Batangas) has been increasing, backed by the growth of manufacturing and logistics industries as well as the existing and upcoming infrastructure developments. As of first quarter of 2019, the total stock of PEZA-registered industrial parks in GMA has reached an estimate of 4,100 hectares with most of the stock found in the provinces of Cavite, Laguna and Batangas. However, the industrial supply in the provinces of Tarlac and Pampanga is growing as well, propelled by the rising need for industrial properties housing the products of multiple firms and the influx of investments in Clark.
The robust growth in the tourism sector, coupled with the rising investments in hotel developments is seen through the completion of two hotel developments in Metro Manila, adding 520 rooms to the total stock in the first quarter of 2019. These hotels are Sheraton Manila in Pasay City and DusitD2 the Fort within BGC in Taguig City. As of 2019’s first quarter, total existing stock is approximately 36,700 rooms with the hospitality sector forecasted to have a promising growth with more pipeline of developments expected in the upcoming years.
Apart from robust growth from three to five-star hotels, foreign budget hotels are recently expanding operations in the Metro Manila market. In JLL’s February 2019 PMM, it was reported that Oyo Hotels and Homes, an Indian hotel network, is set to expand all over the country with 21,000 more rooms in the pipeline. Currently, Oyo has 500 rooms in their 21 franchised and leased hotels located in Metro Manila, Cebu, and Tagaytay. Another budget hotel chain from Singapore, RedDoorz, will continue to expand within the country by establishing 250 properties in Bohol, Boracay, and Iloilo through partnerships with small hotels and property owners. As of writing, RedDoorz already has 100 properties in Cebu, Davao, Metro Manila, and Pampanga.
JLL has also reported the positive trend in the office sector, wherein the Business Process Outsourcing (BPO), online gaming, and flexible workspace companies are expected to take the lead in the demand growth in the first quarter of 2019. A total of 173,600 sqm. of office space was added to the total existing stock, bringing the existing supply in Metro Manila to 8.0 million sqm.
The modest growth on the office space supply is likely to continue, with a pipeline of office developments to complete in the upcoming periods. According to JLL’s February 2019 PMM report, SMPH is scheduled to open a 16-storey development called the Four E-Com Center in Pasay City. SMPH is reported to add more office spaces within the SM Mall of Asia Complex and in other SM shopping malls. The conglomerate’s office building portfolio is anticipated to reach 793,000 sqm. GFA by 2020.
Keppel Land Limited (Keppel Land), one of Asia’s premier real estate companies, together with its Philippine joint venture partner, Banco de Oro Unibank (BDO), is setting the benchmark for Grade A commercial developments in Ortigas with the completion of The Podium West Tower. The office tower is progressing on track to welcome tenants in the first quarter of 2019 for fit-out ahead of its completion in the second quarter of 2019. JLL is appointed as one of the marketing agents for the tower.
Located along ADB Avenue, the 42-storey Podium West Tower offers a net leasable area of more than 89,000 square meters of prime office space. The office tower is also the first premium-grade office development located atop a retail mall, The Podium, within the Ortigas central business district.
The Podium West Tower has been awarded the LEED Gold (Core & Shell) Pre-Certification by the U.S. Green Building Council, and is the first building in the Philippines to receive the provisional Green Mark Gold Award by the Building and Construction Authority of Singapore.
The uptrend in the office market may be attributed to the healthy demand for office spaces. Flexible workspaces are considered as an emerging demand driver, fueling the take-up of office spaces in key business hubs in Metro Manila. In the recent February 2019 JLL PMM, flexible working spaces are forecasted to be on the rise. Common Ground, a Malaysian co-working space operator, is set to open 8 more facilities after the launch of its second hub – a 1,700 sqm. co-working space at IBP Tower in Ortigas Center, Pasig City. Meanwhile, local real estate developer RLC, through its own flexible workspace brand Work.able, opened its first flexible workspace facility at Cyberscape Gamma in Ortigas Center, Pasig City occupying 1,100 sqm. of office space with a mix of co-working and private offices.
JLL further reports that for 2019, the continuous domination of the millennial generation in the overall Philippine employment population will influence in the change on work culture, driving the popularity of flexible workspaces in the Philippines. This is seen to boost the demand for office spaces from flexible workspace providers with the millennial generation penetrating this type of work environment.
The BPO, online gaming, and other tech-driven companies are seen to maintain and push the demand for real estate spaces this 2019. JLL expects growth in the take-up of office spaces from BPP companies to spread outside Metro Manila including emerging cities such as Davao, Cebu, Clark, Cagayan de Oro, Iloilo, and Bacolod.
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JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.3 billion, operations in over 80 countries and a global workforce of over 90,000 as of December 31, 2018. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com
In the Philippines, JLL has been operating in the country since 1997 as a 100% wholly-owned entity and currently manages about 5.2 million square meters of real estate with a workforce of over 1,100 employees. With more than two decades of local expertise working hand-in-hand with its global legacy, JLL provides to the Philippine real estate market an unparalleled synergy of services with a strong commitment to achieve real estate ambitions through future-ready approaches.
For further information, visit jll.com.ph