Manila, December 14, 2017 – The Philippine economy, as measured by real gross domestic product (GDP), accelerated by an impressive 6.9% in 3Q2017, beating analysts’ forecasts. The growth clocked during the period is faster than the 6.7% posted in 2Q2017 and slightly slower than the 7.1% recorded in the same period last year that benefited from spillover effects of election spending. Year-to-date growth stands at 6.7%, well within the government’s projection of 6.5% to 7.5%. The country remains as one of the fastest growing economies across Asia, outpacing China’s 6.8% and Indonesia’s 5.1% and only behind Vietnam’s 7.5%.

The country’s property sector remains upbeat as it is fueled by a robust macroeconomic environment. We see office, residential, and retail segments benefiting from the approval of the first package of tax reform and the planned relaxation of foreign ownership restrictions in key economic sectors such as retail and construction. Overall, we expect the local property market to benefit from the government’s commitment to accelerate infrastructure spending. This is reflected by public construction rising by a robust 12.6% in the third quarter of the year despite a high base (+20%) in the same period in 2016, an election year; and an 8.3% increase in government spending. A major risk, however, is the implementing agencies' low absorptive capacities or their inability to fully spend their budgets.

Aside from unlocking land values in areas outside Metro Manila, ramped up public infrastructure outlay should open more opportunities for firms engaged in construction, and operation and maintenance of key transport infrastructure.

We encourage developers and tenants to take advantage of the country’s buoyant macroeconomic backdrop by implementing the following measures:

  • Cost-sensitive industrial locators should explore space in the Northern and Central Luzon areas where the bulk of new industrial space is being developed;
  • Mall operators should complement their physical stores with expanded presence on online selling platforms to maximize the Filipinos’ rising disposable incomes and proliferation of e-commerce throughout the country;
  • Condominium developers should strengthen their respective selling and leasing teams amidst the challenging residential landscape in Metro Manila and continue looking for second and third tier locations viable for horizontal (house & lot) development;
  • Office space developers should continue targeting offshore gambling firms as they are projected to occupy additional space by 2018; and
  • Tenants should consider the slight rise in office vacancy as an opportunity to transfer and consolidate to newer buildings especially in Fort Bonifacio and Manila Bay Area where bulk of new supply will be coming from. 

Aside from private-sector driven growth, Colliers believes that the sustainability of the Philippines’ real estate sector will primarily hinge on key government policies set to be implemented next year such as the following:

  • First package of the Comprehensive Tax Reform Program which covers the reduction of personal income tax rates;
  • Second package which involves the reduction of corporate income taxes;
  • Relaxation of foreign ownership restrictions in a few key economic sectors such as retail and construction; and
  • Amendments to the existing Procurement law and Doing Business procedures which should entice more developers to participate in the government’s massive infrastructure development program.

The successful implementation of these measures should ensure gains for the property sector and drive local real estate growth even beyond the current administration.



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Colliers International | Manila 11F Frabelle Business Center, 111 Rada Street Legaspi Village, Makati City 1229 Philippines | Tel: +632 888 9988