07 November 2014
Makati City – In a recent briefing, Colliers International announced that the Philippine real estate market continued its strong momentum during the third quarter of 2014. Julius Guevara, Director of Research & Advisory Services, said that the real estate sector was identified as one of the key drivers of economic expansion in the second quarter GDP growth of 6.4%. “While the numbers for the third quarter are yet to be released, we are optimistic that the real estate market will continue to support the country’s economic growth story,” Guevara added.
The office sector performed exceptionally. In Metro Manila vacancy fell to 2.6% despite some 68,000 square meters of office space introduced during the third quarter. “We saw a sharp decline in the availability of space across all the major office precincts in Metro Manila. Ortigas Center, Fort Bonifacio, and North Triangle area in Quezon City posted a 1-2% vacancy decline,” Jie Espinosa, Director of Office Services, said. As a result, rental rates continued to increase for all building grades. Office rents in the Makati CBD grew between 2 and 3% while in Ortigas Center rents increased by 2%. Fort Bonifacio rents, on the other hand, increased between 1.5 and 2.5%. “Colliers maintains a bullish outlook for the office sector in light of the recent announcement by Tholons and IBPAP that the BPO industry in the Philippines can double its revenues to USD48 billion by 2020. This presents many opportunities for office developers to pursue projects in Metro Manila,” Guevara said.
Meanwhile, the retail sector benefitted from a surge in demand from local and foreign retailers. “More retailers are expected to open shop in the next 6 to 9 months, as they have pre-committed significant space in the major malls in Metro Manila,” Arahan said. While retail vacancy for super regional and regional malls has climbed marginally over the past six months (to 2.6% currently), Arahan noted that the influx of retailers will cause downward pressures on vacancy. “The introduction of Stores Specialists, Inc. in the stock exchange and the expansion activities pursued by Robinsons Retail will definitely bring in more retail brands in the country, fuelling more demand for retail spaces,” Arahan said. Retail rents, consequently, are expected to grow by 5 to 6 percent in the next twelve months.
Another highlight in the third quarter was the volume of significant transactions. This has continued with the more recent winning bids for two GSIS-owned lots in Bonifacio Global City which attracted strong interest and under-bidders at a 7% discount to the winning bids. “The transactions we have witnessed clearly reflect the confidence of the local development community that fundamental demand from real estate users and investors will remain robust,” noted David Young, Managing Director.