Manila rising as the ‘new Hong Kong’
Manila is rapidly rising as a megacity powered by a growing pool of high-value talent, real estate expansion and a robust consumption-driven economy, property advisor Santos Knight Frank said Wednesday.
“Manila today is the Hong Kong and Singapore of 30 years ago. The level of development in the metropolis over the last decade has been unprecedented and reflects on the accelerated expansion of the property market. Manila has since become an important hub for industries such as IT-BPO [information technology-business process outsourcing] with huge opportunities of growth for other sectors,” said Santos Knight Frank chairman and chief executive Rick Santos.
He said with a population of more than 25 million people, the Greater Manila Area now had more people than Hong Kong and Singapore combined.
Its demographic is a high-value asset in industries such as IT-BPO, where Metro Manila ranks as fourth in the world based on the 2017 Tholons Services Globalization (Outsourcing) Index.
A fast-growing metropolis, Metro Manila’s property market remains robust vis-à-vis several Asian cities. Prime office rents grew between 5 percent and 6 percent annually from 2011.
Prime office rents in Metro Manila increased 3.4 percent year-on-year in the second quarter, outperforming Tokyo at 3.2 percent; Taipei, 2.8 percent; Beijing, -1.9 percent; Shanghai, -2 percent; Singapore, -5.1 percent; and Jakarta, -8.3 percent.
Meanwhile, Metro Manila had one of the lowest vacancy rates at 3.4 percent across Asia Pacific in the second quarter.
“On a regional basis, the performance and fundamentals of the Manila office market look solid. While some of the other Southeast Asian markets are seeing demand remain sluggish and the major Chinese cities are seeing huge amounts of new supply, the Manila market has one of the tightest vacancy rates in the region and looks set for a strong 2018,” said Knight Frank Asia Pacific head of research Nicholas Holt.
The consulting firm said with a growing number of companies venturing onto the global stage, Metro Manila continued to see diversified demand, not only in the office market, but also in the residential sector, where investors from Southeast Asia, China and the Middle East were putting more capital into the Philippines.
“Over the next four years, Manila will see more than 3 million sqm of new office space added to the market. About 2 million sqm of residential space and half a million sqm more for retail will come online by 2019,” Santos said.
The government lined up 64 major infrastructure projects in the Philippines, several of which are underway in Metro Manila such as the NLEx-SLEx Connector Road, Naian Expressway Phase 2 and NLEx Harbor Link.
To decongest the metropolis and encourage development in the outskirts, important mass transport projects such as Mega Manila Subway, Manila-Clark Railway and expansion of the Light Rail Train are also in the pipeline.
“With limited supply of land in the city core, new districts have emerged in the outskirts of Metro Manila. The next wave of expansion is happening in emerging areas such as Alabang, Nuvali, Bulacan and Clark. It is crucial that infrastructure is in place to provide efficient connectivity between various parts of this growing city,” Santos said.