PH investors should prepare for entry of new real estate classes: Alternatives – JLL ​

Investors in the Asia Pacific Region are now seriously looking into new sectors of the real estate markets. And the Philippines is no exception.

In a report by JLL, a leading professional services firm that specializes in real estate and investment management, it says that more and more investors are considering investing their money into Alternative real estate sectors because of their attractive yields and long term growth prospects. These Alternatives, according to JLL, are potentially big economic drivers as they complement more traditional sector investments.

Topping the list of promising new real estate asset classes in Asia Pacific is Aged Care, as the senior population is expected to swell from 962 million in 2017 to 2.1 billion by 2050. In Japan alone, 53% of their working population is expected to reach the age of 65 and above by 2030. JLL Philippines Head of Research and Consulting Janlo de los Reyes says, "The Philippines makes an attractive destination for retirees because of the competitive cost of living, hospitable culture, and warm climate. Currently, 8 Newtown Boulevard and One Pacific Residence by Megaworld in Mactan Newton, Cebu have been mostly sold to Japanese retirees. Another retirement facility is Amonsagana in Balamban, Cebu which is being run by Syntech Properties, Inc., under the Woh Hup Group from Singapore."

Another alternative prospect is Student Housing. In India, there are 34 million college students, a third of whom are studying outside their home state. Meanwhile, Tokyo has 1.5 million tertiary students, but has no world-class educational housing facilities. Here in the Philippines, there are no formal student housing present yet but we have seen the rise of dormitels in the fringes of Makati and BGC. de los Reyes points out that these professionalized form of dorm accommodation has piqued the interest of major real estate players. SM bought 61.2% of MyTown Dormitel while Fort Bonifacio Development Corporation is developing Flats BGC at 5th Avenue which has 1,500 beds.

Data Centers are also expected to require a bigger chunk of the property market with yields of between 15% to 25% in leveled returns.  Among Asia Pacific countries, China is seen to have the highest demand as the cloud computing market is projected to rise from $1.5 billion in 2013 to $20 billion by 2020. In the Philippines, apart from local telcos such as PLDT and Globe investing in data centers, there are now MNCs looking to set up operations in the country.

According to de los Reyes, the entry of these new Alternatives may serve as complements to the Business Process Outsourcing (BPO) industry, which takes up a huge chunk of the Philippine real estate market. "Data centers would be able to support the BPO industry as the sector moves up higher in value chain offerings while dormitels can easily provide accommodation to BPO employees."

He adds, "JLL has established a Regional Alternatives Investment Team to handle such transactions. But towards the end of the year, JLL Philippines is planning to fully dedicate resources into managing these new real estate sectors."

JLL Philippines Country Head Christophe Vicic points out the importance of recognizing these Alternative asset classes. "Real estate investors in the Philippines must be able to map out their strategies as early as now to accommodate these Alternatives. Doing so will enable the country to get a sizable share of property investments and place the country in close stride with its Asian neighbors."

To learn more about alternative real estate markets, visit https://www.theinvestor.jll/rise-alternative-real-estate/