Lamudi-JLL reports surge in BPO, POGO, tourism

The Philippines experienced favorable investment conditions in the third quarter of 2019, contributing to the uptake of real estate properties, anchored heavily on drivers such as the BPO, POGO,  and tourism industries.

Lamudi-JLL reports surge in BPO, POGO, tourism

Metro Manila, the most popular place for real estate investments, continued to hold the majority of supply, but the country’s overall stable economic performance and the growing investor appetite from different regions opened the door to investments in the outskirts of Manila, and even outside of Luzon. 

Real estate, renting on uptrend

Metro Manila real estate market exhibited stable performance through sustained demand despite facing headwinds. On the other hand, the outlook remains upbeat, pushed by positive market sentiment from key stakeholders and continued property development across Metro Manila.

Real estate, renting, and business activities improved by 4.2 percent in the third quarter of 2019, making up 20.3 percent of the total service sector and 12.1 percent of the total third-quarter GDP. 

Fast growth in office property market

Other sub-sectors with notable growth were the construction under the industry sector with 16.3 percent,  and financial intermediation under the services sector with 10 percent growth.

 The office property market maintained growth through new supply completions and sustained stable demand despite headwinds in primary drivers. Around 403,500 sqm of office spaces were added in the third quarter coming from Taguig City, Quezon City, and Mandaluyong City. Approximately 526,200 sqm more is slated to be added to the total office stock, mainly from Pasig City, and Quezon City.

POGO’s still rocking the market

Meanwhile, Philippine Offshore Gaming Operators made up 27 percent of the completed deals in the same quarter. The industry stays intact with the government’s initiative to further strengthen the framework through cracking down on illegal operations. Flexible space operators also made up a notable portion of the leasing activity.

The sustained demand in the office sector is seen to support stable growth of rents. Makati City and Taguig City command the highest asking monthly rental rate due to the presence of premium quality buildings, accessibility, and existing headquarters of major players from their respective industries mainly located in Makati CBD and BGC. 

Business hubs in Bay City within Pasay City and Parañaque City are also seeing higher asking rental rates pushed by the robust demand from POGOs and other interest from mainland Chinese businesses.

Residential projects fast off the blocks

The residential condominium market in Metro Manila sees stability with continuous development launches and supply completions. 

About 6,100 units were added to the total residential stock in 3Q19, mostly coming from residential projects completed in the emerging townships in Quezon City, such as Cloverleaf and Vertis North, as well as Circuit Market, in Makati City. 

The sales market sustained strong interest from high net-worth individuals and investors, as overall sales rate in Metro Manila posted 95 percent as of 3Q19. 

In terms of the rental market, corporate housing for expatriate employees continues to drive the upper-mid to luxury development within Makati CBD, BGC, and Ortigas CBD where MNCs, O&O firms, embassies, and consulates are typically headquartered. 

Staff housing for POGOs also support the strong leasing demand in Bay City, spreading towards other areas such as Quezon City and Muntinlupa City due to emergence of presence in these areas. Local employees and students also make up a portion of the leasing demand as they opt to reside in half-way homes near their workplaces and schools, respectively.

Retail, hospitality still the way to go

The retail property market grew with expansions and launches of new developments across Metro Manila. The completion of Ayala Malls Manila Bay added around 160,000 sqm GLA while the expansion in Robinsons Magnolia added another 15,000 sqm GLA to the total stock in 3Q19. 

The hospitality sector expanded in 3Q19, driven by the rise in hotel investments and tourist arrivals. About 580 rooms were added to the total stock during 3Q19, coming from Sheraton Manila Bay by Alliance Global Inc. in Manila City, Summit Hotel Greenhills by  Robinsons Land Corporation in San Juan City, and Park Inn by Radisson–North EDSA by SM Prime Holdings in Quezon City. 

 The hotel market also anticipates the expansion of budget chains such as RedDoorz and OYO in key areas.

‘Staycation’ phenom here to stay

Apart from the typical demand drivers of MICE, the local ‘staycation’ phenomenon, and casino patrons in Bay Area, the hotel market saw the rise of POGO employees as long-staying guests, notably in Pasig City, Mandaluyong City, and Muntinlupa City. The strong demand accommodation has spilled over to hotels due to the limited residential options in the said areas.

Overall, the Metro Manila property market remained stable across all sectors as seen in the sustained growth spurred by their respective demand drivers. 

Despite issues on PEZA and the moratorium and crackdown on POGOs, the office market remains to have stable leasing activity from IT-BPM and online gaming firms. 

At the same time, foreign and local buyers of residential projects continue to have positive investment sentiment banking on the development of key areas in Metro Manila. The retail market saw growth with the entry and expansion of both local and foreign brands in F&B and emerging operators. The large new supply completed so far in 2019 may have entered the market at the same time as when the headwinds popped up, but the current developments on policies, infrastructure, and investment direction from both local and foreign source pave way for sustained growth moving forward. 

Millennials lead charge in property leads

The 25-34-year-old age group dominates activity on the Lamudi platform, generating leads almost as much as the sum of leads from all other age groups combined. The second-most prolific searchers are in the 35-44 age group. Overall figures show that females contribute to 62 percent of total real estate searches. 

Looking at Philippine real estate as a whole, houses account for most for-sale inquiries, generating 33.78% of leads. In terms of rentals, apartments rank first, with 42 percent of all rental inquiries. Condominiums for rent also contribute to 34.98 percent of leads, showing the diversified interest in real estate investments all over the country. 

Topics: real estate properties , Philippine Offshore Gaming Operators , Alliance Global Inc.
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