ILOILO 1Q 2018 PROVINCIAL PROPERTY MARKET REPORTS

We are pleased to share with you our latest Provincial Property Market reports.

In this release, we have identified key issues and opportunities in the province of Iloilo particularly in the office, residential and retail sectors.

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ILOILO OFFICE SECTOR
The office sector growth in Iloilo has been limited by the available supply in the province. While interest from investors remains strong, the limited supply has prevented any major take-up from business process outsourcers (BPO) looking to expand. Vacancy stands at 11% but much of the available space is in older buildings that may require significant upgrading before use. Newer buildings, on the other hand, are significantly leased even before completion. As noted in our previous report, Colliers believes that the Iloilo office sector is ripe for growth considering its reliable labour pool and its supportive local government. However, there are no new projects in the pipeline that could spur new office activity. We note the rising number of flexible-workspace sites that is reflective of a growing entrepreneurial community. In terms of major movements, we expect more significant growth in the medium to long-term, fuelled by improvements in infrastructure as plans for land reclamation and the building of a skyrail are underway.

ILOILO RESIDENTIAL SECTOR
The Iloilo residential market is still largely composed of house and lots (horizontal). Interestingly, however, the provincial market has seen the rise of the condominium (vertical) market recently. While still in its early stages of development, the vertical market has notable bright spots. Fuelled by the growing business process outsourcing (BPO) sector and the huge community of OFW families in Iloilo, condominiums near the city centre have provided new options for Ilonggos. Especially for those living outside the city, the condominiums within the business district have become preferred alternatives. As demand is primarily supply-driven, Colliers recommends that developers continue to launch projects and ensure timely completion of vertical projects. Vertical developments projects near the business district should remain attractive, up to PHP6.0 million (USD120,000) or the mid-income segment. Meanwhile for horizontal developments, areas outside the city will continue to be preferred, particularly those under the affordable segment or PHP3.2 million (USD64,000) and below.

ILOILO RETAIL SECTOR
Iloilo's retail sector is dynamically changing with provincial brands competing healthily with bigger national and foreign brands. It is not surprising that well-established local developers with malls such as Mary Mart, Gaisano, and Amigo are also faring well alongside national players such as SM, Robinsons, Ayala, and Megaworld. Fuelled by rising income levels among Ilonggos, supported by the constant influx of tourists, it appears that the Iloilo retail scene will continue to thrive. In order to take advantage of these demand drivers, developers are ramping up their plans to build new malls both within and outside the city. About 79,800 sqm of retail GLA is expected to be completed within 2018. Colliers recommends that developers continue to allocate a portion of their space to local tenants alongside bigger foreign and national brands to cater to the diverse preferences of consumers. Meanwhile, we suggest that tenants carefully select their locations given the upcoming supply spanning San Rafeal, Pavia and Jaro. Furthermore, differentiation of retail offerings will be more important considering the upcoming supply.

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