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Market Intelligence | Philippines February 23, 2022

Pacifica Homes, Century Pacific, Affordable housing, Residential real estate, Foreign direct investment, Industrial real estate

This week, Colliers Research provides insights on Pacifica Homes’ new affordable housing project in Magalang, Pampanga, and our outlook for the horizontal residential segment; and total approved foreign investments in 2021 reaching PHP192 billion and how it will benefit the industrial real estate sector.

Century Pacific expands into affordable housing

SUMMARY

Century Pacific’s Pacifica Homes recently launched Hamana Homes Magalang, its first affordable residential project. Each unit costs between PHP2.0 million and PHP3.9 million (USD51,000 and USD76,300) depending on the housing type, which ranges from townhouse, duplex, or single-detached. The residential subdivision will also feature a clubhouse, swimming pool, linear parks, and a basketball court. As of end-January, the project’s slope projection, perimeter wall, and landfill compaction for the model unit are nearing completion.

RESEARCH VIEW

In 2021, we recorded a take-up of 4,100 house-and-lot and lot-only units in Pampanga, a 49% increase YOY. Colliers believes that there will be heightened demand for horizontal residential projects in key provinces including Pampanga with the completion of major infrastructure projects in the next 12 to 24 months. Based on our Q4 2021 Residential Survey, around 15% are considering Pampanga for their next horizontal residential investment. In our view, Pampanga will be a popular residential hotspot especially with the expansion of Clark International Airport, which aims to decongest the Ninoy Aquino International Airport. Colliers recommends that developers consider strategic land-banking in Central Luzon and South Luzon to meet growing demand for horizontal residential projects in provincial locations.

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Approved foreign investment pledges bounce back in 2021
   

SUMMARY

Data from the Philippine Statistics Authority (PSA) show that total approved foreign investments in 2021 reached PHP192 billion (USD3.8 billion), up 71% YOY, but still less than half compared to the PHP390 billion (USD7.6 billion) recorded in 2019. The improvement can partly be attributed to the easing of mobility restrictions in Metro Manila in November last year. Foreign investments almost quadrupled YOY in Q4 2021 to PHP133 billion (USD2.6 billion) from PHP36 billion (USD715,000) in the same period in 2020. In Q4 2021, the information and communication technology industry accounted for 97% of approved investment or PHP129 billion (USD2.5 billion) followed by manufacturing with PHP2.1 billion (USD41 million). Meanwhile, the Cavite–Laguna–Batangas–Rizal–Quezon (CALABARZON) region received the highest commitment among all regions in the country, with total investment of about PHP1.9 billion (USD37 million).

RESEARCH VIEW

Colliers believes that continued inflow of foreign direct investments (FDI) will likely benefit the industrial sector. In our view, FDIs committed to fund manufacturing projects will most likely be channeled to the Cavite–Laguna–Batangas (CALABA) and North–Central Luzon hubs, which house majority of the country’s industrial parks. Colliers recommends that investors who plan to expand in the Philippines take advantage of government incentives, including reduced corporate tax rates. Colliers believes that the implementation of various reforms on taxation and business registration should help the country attract more manufacturing investments. These, in turn, should buoy demand for industrial parks and facilities such as warehouses. We see land leasehold rates rising over the next 12 months due to sustained demand and this should entice more developers to expand existing parks.

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