Manila, October 31, 2018 - In its Q3 2018 Market Snapshot, the Capital Markets and Investment Services (CMIS) units of Colliers International in Asia noted that market sentiment has become more cautious in some key markets in the region due to more adverse economic and policy conditions. In the Philippines, the flow of investments into major property segments such as retail and industrial could hinge on the implementation of key policy reforms. Hence, Colliers International Philippines believes that these are the key sectors to watch for over the next 12 months.
Terence Tang, Managing Director of Colliers International’s CMIS group in Asia noted that in Hong Kong, policymakers recently raised the key lending rate; Singapore has introduced more cooling measures targeting the residential sector and authorities in Beijing unveiled new policies during the quarter tightening development restrictions in core areas. Tang added that, “From regulatory changes that promise to pave the way for further investment in the retail sector in Myanmar…to planned mega mixed-use developments in Thailand and the opening of the Guangzhou-Shenzhen-Hong Kong Express Rail Link in the Pearl River Delta, there is a steady pipeline of opportunities emerging that will continue to draw interest even in a more challenging regional climate.”
In the Philippines, market sentiment remains positive overall especially with the office segment poised to post record-high supply and demand for 2018 despite slower-than-expected gross domestic product (GDP) growth in the first six months of the year.
“Looking ahead, the government intends to spur economic growth by attracting more investment through relaxation of foreign ownership restrictions in key sectors such as construction and retail, and the continuing construction of major infrastructure projects primarily in Metro Manila. These projects should influence the strategies of developers in the country’s capital moving forward,” said Richard Raymundo, Colliers International Philippines’ managing director.
For other property segments, foreign and local investors are awaiting the release of the latest foreign investment negative list (FINL) and lawmakers’ action on the proposed Tax Reform for Attracting Better and High-Quality Opportunities (TRABAHO) bill that could play a crucial role to the flow of investments into retail and industrial sectors over the next 12 months. The FINL lists the investment areas restricted to foreigners.
Despite the proposed implementation of the second installment of the tax reform program, which seeks to rationalise tax and non-tax incentives currently enjoyed by industrial tenants, industrial space take-up by manufacturers remains stable, while a few existing tenants have announced plans to expand operations within Central and Southern Luzon industrial parks.
The government has indicated it will reduce the minimum capital required for foreign retailers to open shop in the country from USD2.5 million to USD200,000. This will take effect when the government releases the next Foreign Investment Negative List (FINL) by the end of the year. “This move by the government should enable entry of more foreign retailers, particularly those in the food and beverage (F&B) and home furnishing sectors as these are still dominated by local players,” noted Raymundo.
Colliers also noted the major deals recorded in 2018 so far, including a joint venture between Ayala Land Inc. and Royal Asia Land Inc, for the development of an approximately 10 million sq ft mixed-use development site in Cavite and the formation of a joint venture company involving Robinsons Land Corp. and Shang Properties Corp. for the development of an approximately 96,650 sq ft mixed-use site in Bonifacio Global City.