Residential, Offices: Filipinos to see more quality developments
By Irma Isip, published in Malaya Business Insight.
Experts and developers see a flight to quality in both residential and office developments as Filipinos' incomes improve and tastes become more discriminating.
In a press conference at the New World Hotel announcing the Philippine Property Awards to be held in May, Lindsay Orr, chairman of Jones Lang LaSalle (JLL) Philippines, said he sees strong demand for both office and residential segments this year and onwards.
Orr said despite earlier fears, it is still business as usual for the business process outsourcing (BPO) sector which would continue to fuel office demand.
He said about 2.3 million square meters of office space will come online in Metro Manila between this year and next. Of the 1.3 million sq.m. expected this year, half had been pre-committed which is an impressive rate.
Orr also dismissed comments on massive oversupply, saying demand continues to increase and that supply and demand would level off in three to four years.
While most activities would still be in Metro Manila, he said, a trend seen in the previous year is the emerging thrust towards the provinces particularly in the south, allowing development to spread more evenly.
Orr also noted the strong remittances from overseas Filipino workers and BPOs are driving the mid-market condominium market especially for those who want to live close to work.
However, he said the luxury condominium market continues to be resilient, although it is still just five percent of all developments in the past 10 years. This share is expected to stay in the next five years.
JLL continues to see more pent up demand in luxury condos.
"There will be fight to quality because (Filipinos) can afford it … there will be an increase in demand. An emerging middle class are earning higher salaries," Orr said.
Orr benchmarks the price for developments at P200,000 per sq.m., costing P15 million per unit.
If there is a benchmark for luxury residential, Orr said, an Ayala development, Park Central, is quoting P300,000 per sq.m. which raises the bar in the segment.
He also said the same flight to quality could be seen in the office space as locators, especially captives in BPOs and multinationals, look for offices that are efficient and cost-effective.
Raymond Rufino, executive vice president of The Net Group, said his company is also bullish of the property market this year.
The Net Group, which has the biggest office stock in Bonifacio Global City (BGC), is known for its premium-grade offices and integrates green and sustainability features in its developments – a strategy that has paid off.
Rufino has seen the move of multinational corporations like Coca Cola, Philamlife, Procter & Gamble, Google, etc. to locate in their buildings.
"These are companies who are willing to pay for higher rent," noted Rufino.
He said a "nice" office is also a big magnet for talent especially for companies recruiting millennials, rather than if an office is located in an old building.
"Movement to quality is also happening (in the office segment)," said Rufino, citing a World Building Council study which states that workers in a green building are healthier and more productive.
Jericho Go, senior vice president of Megaworld Corp., said as the biggest landlord in BGC, Megaworld has seen a shift among companies to consolidate their operations in a single location to be more efficient in terms of cost and operations.
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