Flexibilty is key to sustaining the Phillippine property market in 2019, according to Colliers International.

The global real estate company released its top 10 forecast for the market late last year, highlighting the trends it believes will drive growth across the next 12 months.

Infrastructure-led government spending to spur property

With public infrastructure spending rising 21 per cent annually from 2015 to 2017, Colliers sees the government’s plan of frontloading infrastructure projects as driving the country’s property sector. 

The company predicts there will be a sustained allocation for public infrastructure projects as the government tries to fulfill its promise to "Build, Build, Build" in Metro Manila and other parts of the country.

Metro Manila office vacancy to remain at sub-6 per cent

Colliers believes projected office demand will move in step with the new supply throughout 2019, with the knowledge process outsourcing sector one of the main drivers of demand.

Colliers Research Manager Joey Roi Bondoc said the presence of top technology firms such as Google in Manila "proves that the country remains on the radar of large KPO companies".

Offshore gaming to expand outside Manila

As of 3Q 2018, Colliers recorded 4.8 per cent vacancy across Metro Manila, which Mr Bondoc said was driving offshore gaming firms to look for space outside Manila. 

"We encourage new and expanding offshore gaming companies to continue looking for space in Cebu, Pampanga, and Laguna where bulk of large space is still available," he said.

"For 2019, we see offshore gaming firms occupying between 200,000 square metres to 300,000 sq m of office space, representing about 20-23 per cent of projected take-up in 2019."

Flexible work spaces to grow by 10 per cent annually

Mr Bondoc said the Metro Manila office market, coupled with the emergence of a mobile workforce and firms’ drive to bring down operating costs had given rise to the flexible workspace.

"We see Manila’s flexible workspace stock expanding by at least 10 per cent per annum over the next three years," he said.

"This is mainly due to continued rise of micro, small, and medium enterprises; an influx of multinational corporations and outsourcing firms looking for plug-and-play offices; and the implementation of a set of policy reforms likely to improve the country’s business climate."

Manila Bay area to dominate metro Manila condo price and supply 

In Q3 2018, the Bay Area overtook Ortigas Center as the third largest submarket in terms of condominium stock, with 200 more residential units available compared to Ortigas Center.

Mr Bondoc said Colliers expected the Bay Area to overtake other submarkets in the coming years.

"In 2019, we see the completion of more than 6,000 new condominium units in the Bay Area out of the projected 15,000 new units," he said.

"This rapid growth of the Bay Area has been accompanied by the increase of pre-selling condo.

Makati City Source: Colliers International

Luxury residential market to remain strong, price to breach PHP400K per square metre

Colliers believes that luxury condominium demand should remain strong due to Metro Manila having one of the most attractive rental yields in the region.

"The luxury market in the country’s capital is relatively small but demand has been stable over the past few years," Mr Bondoc said.

"The projects being leased out or sold to the secondary market continue to receive strong demand.

"This entices affluent locals and foreign investors to look for similar developments in Metro Manila."

Food and beverage to further dominate retail absorbtion

At present, the food and beverage sector covers 30-50 per cent of leasable space in shopping centers across the metro area, one of the highest levels in the Asia Pacific region. 

Mr Bondoc said a continued inflow of remittances from overseas Filipino workers and rising disposable incomes, coupled with a generally stable macroeconomic backdrop, were luring more foreign food and beverage brands to establish a foothold in the Philippines.

"A number of foreign F&B brands such as Popeye’s, Panda Express, and Shake Shack are reportedly opening branches in Manila over the next 12 months and we see this contributing to greater retail space absorption across the country’s capital," he said.

More foreign players in home furnishing and luxury retail in the Bay

Mr Bondoc said the increasing popularity of condominium living in Metro Manila meant there would be sustained demand for home furnishing in 2019.

"Home furnishing segment is still dominated by local players," he said.

"Colliers believes that this is an interesting segment once foreign players become more aggressive in establishing footprint in the country.

"The completion of new malls in the Bay Area such as Aseana mall is an opportunity for operators to house luxury retailers."

More strategic land banking and township development in Quezon City

With improving connectivity stemming from the construction of the Manila Subway, MRT-7 and the common LRT-MRT station, Colliers sees Quezon City becoming more attractive for mixed-use projects that feature office, residential, and retail projects.

"With renewed interest in Quezon City, we see the proliferation of more integrated communities similar to Ayala Land’s and Eton Properties’ existing estates," Mr Bondoc said.

"In 2019, Colliers recommends and expects more aggressive and strategic land banking by developers around the first three stations in Quezon City."

Upgraded infrastructure to spur Cebu leisure

Mr Bondoc said Colliers sees Cebu’s tourism sector growing due to a number of infrastructure projects which should open new opportunities in the countryside.

"Over the next 12 months, we see property firms taking a more aggressive approach in exploring parcels of developable land especially in the Mandaue and Mactan areas," he said.

Source: Colliers International

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