LRT1, MRT7 on track to start partial operation by 2021
The Department of Transportation (DOTr) said that the country’s two railway projects, the LRT-1 Cavite extension and the MRT-7 are on track for partial operations by end-2021 despite the construction delays due to the COVID-19 pandemic. According to DOTr undersecretary John Batan, the first batch of light rail vehicles (LRV) for the LRT-1 project is expected to be delivered by Q3 2020. Meanwhile, construction of the MRT-7 project is 55% complete as of April 2020. MRT-7 is expected to serve about 850,000 commuters daily once operational.
Colliers believes that infrastructure projects such as LRT-1 extension and MRT-7 are vital in decongesting Metro Manila and will likely raise the attractiveness of neighboring cities for property development. In our opinion, developers should explore the viability of land surrounding these public projects for township development which feature office towers, residential projects (both vertical and horizontal) and institutional facilities including clinics. These projects should provide more options for residential investors and end-users looking for properties outside Metro Manila such as Cavite and Bulacan.
DoubleDragon sets REIT offering in fourth quarter
Property developer DoubleDragon is targeting to launch its PHP11 billion Real Estate Investment Trust (REIT) in the fourth quarter of 2020 despite the COVID-19 pandemic. According to DoubleDragon Chairman Injap Sia, the company intends to offer firm’s retail, office, industrial and hotel assets. There has been a renewed interest in REITs after the Securities and Exchange Commission (SEC) released the new implementing rules and regulations in January which amended the minimum public ownership, minimum paid-up capital and tax exemption provisions of the law.
Despite the economic impact of the COVID-19 pandemic, some developers are still keen on launching REITs this year. In our opinion, developers that have a resilient portfolio of recurring income generating-assets amidst the COVID-19 pandemic will likely benefit. Meanwhile, Colliers recommends that developers use REIT proceeds to develop integrated communities in key cities outside Metro Manila and refurbish and reposition old assets such as offices and warehouses. Overall, the successful maiden launch of REITs in the Philippines will likely draw interest from both national and local developers. Colliers believes that the successful launch of REITs is likely to support the property sector’s recovery in early 2021.
Ayala Malls to mount thermal scanners in select malls
Ayala Land, Inc. is investing in fully automated thermal scanners in a bid to contain the transmission of COVID-19 virus. The thermal scanners will be mounted in entrances of select Ayala Malls. These include Glorietta, Greenbelt, Market! Market!, Alabang Town Center, Ayala Center Cebu, Central Bloc, Abreeza, Centrio, Trinoma, Ayala Malls Manila Bay, UP Town Center, Ayala Malls Feliz, and Ayala Malls Fairview. Aside from investing in technology, Ayala Malls President Jenylle Tupaz stated that they are also actively training staff and providing guidelines to retailers to safeguard employees and visitors.
The economic slowdown and the implementation of post-pandemic social distancing protocols may affect retail demand for the remainder of 2020. In 2020, we expect a decrease in retail space absorption, which we see resulting in an increase in vacancy, from 9.8% in 2019 to 12% in 2020. For mall operators, the lockdown and the potential drop in OFW remittances are likely to affect consumer traffic in these establishments. We recommend mall operators and retailers to line up their marketing efforts to recapture demand once operations resume. Mall operators should also highlight sanitation of retail spaces.