Looking towards real estate in 2019
Bjorn Biel M. Beltran, Special Features Writer
Recent years will show that the Philippine property market has become one of the most valuable in all of Southeast Asia. In 2018, residential, office, and commercial segments in the industry have withstood the pressures of rising inflation, interest hikes, and a depreciating peso, bolstered by ever-increasing demand from local and foreign investors.
By and large, many signs point to another positive year for Philippine real estate. In a recent round table held by online real estate marketplace Lamudi, property developers noted that continuous pace of technological innovation is playing a bigger role in the development of the industry going forward.
Elizabeth L. Ventura of Anchor Land Holdings, Inc., for instance, said that not only are they able to educate their clients better about their property offerings through the Internet, but the projects that the company itself ventures into have become more viable because of the information that they get about their prospective clients and the feedback that they receive from them.
“We rely on feedback mechanism so we know what buyers want. When you’re very clear with the needs of the clients, you can properly plan your projects,” Ms. Ventura said.
“We need more info about the clients so we could advance and improve our offerings.”
The accessibility and convenience provided by digital property marketplaces are already contributing to the property market’s growth in attracting prospective buyers.
Lamudi Chief Executive Officer Bhavna Suresh said that the Web site’s search traffic figures for January 2019 alone have seen an average growth rate of 40% week on week in terms of search activity.
“These are incredible numbers. We’ve never seen numbers like these. That’s what we’re very excited about. We’ve seen so much traffic coming in from the Middle East and from the US,” she said.
This is not to mention the impressive growth in the supply and demand side of the industry. Buyers in the business process outsourcing sector (BPO), one of the country’s biggest economic contributors, are driving the growth, as well as players in the technology sector and flexible space operators.
Professional real estate services firm Jones Lang LaSalle Incorporated (JLL), in their forecast for 2019, said that the overall outlook for the Philippine property market is positive not only in Metro Manila, but in emerging cities like Davao, Cebu, and Clark.
JLL pointed out that 2019 will be a year that further showcases the emergence of new trends and opportunities in the industry, such as the growth of flexible spaces. The cultural shift led by the millennial generation to a community-based lifestyle driving the popularity of co-working and co-living is driving more foreign flexible space operators to increase their presence in 2019.
According to JLL, flexible space operators like WeWork and IWG have extended their footprint in the country and are expected to expand in 2019. More local providers of co-working and co-living spaces are also expected to emerge, typically operating in fringe areas. The lower capital costs these types of assets require will spark investor interest.
“The demand for real estate space by the BPO sector as well as increasing demand from emerging real estate stakeholders like technology companies and flexible space operators will continue to make significant inroads into the Philippines’ property market in 2019. This expected growth and expansion of the industry in 2019 will hopefully encourage investments in the next wave cities of Davao, Cebu, Clark, Cagayan de Oro, Iloilo, and Bacolod,” JLL wrote in their report.
“As such, 2019 is anticipated to be another solid year for the Philippine real estate industry. Barring any hitches from the upcoming 2019 elections, apprehensions over the implications of TRAIN 2, and the delay in PEZA accreditations on buildings, the year 2020 already looks just as promising.”
Property services firm Colliers International also gave a positive outlook for the Philippine real estate industry in 2019, adding that “the strong demand and evolving preference of tenants is giving rise to flexible workspaces; residential developers are tweaking their projects to cater to Chinese offshore gaming employees and local professionals; and mall operators are more open to foreign food and beverage (F&B) and home furnishing tenants, which we see redefining retail space absorption in 2019.”
Colliers noted that developers are also cashing in on the thriving property market by aggressively acquiring parcels of land outside of the more established business districts, in places like Cebu, Laguna, and Clark in Pampanga.
However, the company called for flexibility among real estate developers as looming challenges threaten to hamper the industry’s development. Such challenges include rising interest rates, which could impact low to mid-income residential demand over the next 12 to 24 months; rising inflation that curtails consumer spending, which accounts for nearly 60% of the country’s economy; continuing private construction delays due to the acute shortage of skilled workers and ramped up implementation of public infrastructure projects; and uncertainty surrounding the implementation of the second package of the Comprehensive Tax Reform Program, which proposes to reduce corporate income tax rates and rationalise tax and non-tax perks granted to foreign investors.
“We encourage developers to continue tapping into the demand brought about by the peculiarities of the Philippine market. For the Philippine property market in 2019, flexibility will be the name of the game,” Colliers said.