Metro Manila is solidifying its position as an attractive real estate market, topping a global list of cities with rising prices despite declines elsewhere.
Property consultant Knight Frank said in its latest Wealth Report that Manila led the pack of 100 markets, where luxury property prices surged 26.3 percent in 2023. The Philippine capital beat out Dubai’s 15-percent increase and the Bahamas’ 15-percent rise.
“As wealth portfolios recovered in 2023, affluent buyers targeted residential property in the world’s luxury markets,” Liam Bailey, global head of research at Knight Frank, said in a statement.
The report said that 80 of the 100 cities registered flat or positive annual price growth, while overall luxury prices climbed 3.1 percent in 2023, representing a solid gain.
Cushman & Wakefield also highlighted the allure of Southeast Asian cities, including Metro Manila.
The region is likely to continue attracting multinational corporations and investors due to its strong growth forecast, favorable demographics and comparatively lower costs, positioning it for increased real estate activity, the firm said.
Speaking at the CoreNet Global Summit in Kuala Lumpur, Cushman & Wakefield’s head of global occupier services for Asia Pacific Cameron Ahrens, said Southeast Asia’s relatively strong GDP forecast makes it a bright spot in the global economy.
“For office occupiers, the growing acceptance of new working styles combined with the cost constraints of a higher interest rate environment bodes well for lower-cost and emerging markets in Southeast Asia,” Ahrens said.
He said that within the region, each market had its own value proposition. “Singapore’s business-friendly environment and deep talent pool continues to attract multinational companies as a location from which to base their regional or even global headquarters,” he said.
“Manila also has a booming office sector, thanks to its significant proportion of shared service centers, or business process outsourcing offices,” said Ahrens.
“The manufacturing and logistics sectors are also key drivers of real estate activity in the region by multinationals. Thailand remains a favored destination for the auto industry, and Vietnam attracts technology manufacturing from companies including Samsung, while Malaysia continues to incentivize investments in high-value manufacturing such as electric vehicle and semiconductor manufacturing,” he said.
In Indonesia, foreign direct investment increased 13.7 percent year-on-year in 2023, driven by the base metal and mining industries and the electric vehicle industry’s demand for nickel, a key ingredient in EV batteries.
Ahrens said, however, the higher interest rate environment and broader macro-economic climate meant that global occupiers [multinational companies] continued to take a cautious approach to cost.
“In the current environment, we are seeing companies take a more considered approach to expenditure, and this extends to expanding headcount. They are being very strategic about where they want to grow their headcount and where they want to grow their business,” he said.
He said that globally, shared service offices and global capability centers are expected to continue seeing growth as multinationals increasingly accept that remote working is both possible and sustainable.
Ahrens noted that during and following the pandemic, the ‘great resignation’ and the ensuing ‘war for talent helped to accelerate the growth of this practice as employers looked to new and often lower-cost markets to fill vacancies and grow their headcount. Manila’s deep, English-speaking talent pool and its established reputation as a business process outsourcing market positions it as a key beneficiary,” he said.
Meanwhile, Singapore continued to see strong occupier activity thanks to its reputation as “the gateway to Asia”.
There were also early signs that other markets in the region could start to see more office activity from multinationals in addition to local transaction activity,” he said.
Overall, Southeast Asia offers a multitude of benefits to global occupiers, Ahrens said.
“Global occupiers are becoming increasingly sophisticated in their network planning and operations optimization,” he said. “The decision to locate a particular function in a particular market happens at the C-Suite level and everything from economics and geography through to culture and working style is considered. At the end of the day, location decisions are based on a company’s unique blend of priorities. But whether it is cost, proximity to manufacturing plants or research and development hubs, or access to talent, Southeast Asia ticks a lot of boxes.”