Looking back, looking forwardJanuary 12, 2012 / By
In 2011, the world was confronted with major economic and ecological events – from the US and Eurozone debt crises to the tsunami in Japan. While there were huge concerns about the negative impact these events could have on the Philippine real estate market, it in fact showed resiliency and maintained the 2010 growth momentum amidst these market externalities.
Looking across the office, residential and retail property sectors, these submarkets have shown improvements. In the office sector, almost 300,000 sqm of Grade A office space across Metro Manila was added to the existing stock. Sustained demand, primarily from the offshoring and outsourcing (O&O) sector, boosted office rentals while positive investor sentiment supported capital values. The residential sector recorded the highest number of annual completions at over 20,000 condominium units across Metro Manila catering to the middle- to high-end market. Demand for these residential units has been continuously supported by remittances from overseas Filipinos (OFs). This sustained inflow of OF remittances has also provided the spending power that drives the retail market which witnessed the entry of new local as well as international retailers, such as Emporio Armani, LeSportSac, Paris Hilton Bags, HTC and Jamba Juice, enhancing the demand for retail space throughout the year.
With 2011 under wraps, we now look to 2012 which is projected to be a banner year for the property market. Grade A office supply in Metro Manila is expected to increase by more than 550,000 sqm, almost double that in 2011. Two new green office buildings – Net Lima and Zuellig Building, expected to lead the trend towards more environmentally sustainable properties, are scheduled for completion this year. On the residential front, 2012 is likely to witness a completion of about 25,000 mid- to high-end condominium units across Metro Manila. This supply includes the completion of the internationally-branded Raffles Residences in Makati CBD, which has set record-breaking selling prices of PHP 200,000 per sqm (USD 4,520 per sqm). Meanwhile, the retail sector will probably see further expansion and renovation of shopping centres, increasing the retail space in Metro Manila, which is already home to three of the largest malls in the world.
In general, with the unprecedented increase in the amount of new supply expected in the various property sub-sectors, the market outlook for 2012 remains positive, although caution is still advised to property players amidst the uncertainties in the global scene. Optimism pervades the local atmosphere as 2012 is projected to be a remarkable year for the Philippine real estate market on the back of stable economic fundamentals, sustained growth of the O&O sector and OF remittances and improved investor sentiment.
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