• Calabarzon seen benefiting from higher govt spending

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    HIGHER government spending reflec-ted in the strong GDP growth in the first half of the year will benefit the industrial and manufacturing property sectors in the Calabarzon region, real estate services firm Colliers International said in a market note.

    “Macroeconomic fundamentals remain robust and should sustain the Philippine property market’s growth for the remainder of the year,” Colliers International research manager Joey Roi Bondoc said in a market note.

    The country’s gross domestic product (GDP) grew by 7 percent in the second quarter of the year and 6.9 percent in the first half of 2016, according to data from the Philippine Statistics Authority (PSA).

    Bondoc said that a number of property sectors are seen to benefit from the economic growth, particularly in the industrial and manufacturing sector, noting that government spending mainly driven by higher public infrastructure spending was a huge contributor to the Philippines’ growth as it grew by 13.5 percent year-on-year.

    “These infrastructure projects included the repair and expansion of access roads leading to airports, seaports, and key tourist destinations across the country,” Bondoc said.

    “The current administration’s plan to develop railway projects in Southern Luzon, for instance, will further increase demand for industrial space and warehouses and logistics facilities in the Cavite-Laguna-Batangas corridor,” he explained.

    Bondoc noted that with the government’s thrust to construct infrastructure projects outside of Metro Manila could create more demand for industrial lots particularly in the Cavite-Laguna area, as it would attract more manufacturing investments.

    “This should translate to higher demand for industrial lots and thus raise land values in the Calabarzon region,” Bondoc said.

    Other sectors to benefit
    Colliers expects household consumption to continue to rise in the coming months, which could contribute to more real estate sales.

    “Over the next 12 months, household consumption’s contribution to the economy will be sustained by a favorable inflation environment (1.3 percent for the first half of the year, well below the government’s target of 2-4 percent); low interest rates (4.4 percent to 6.8 percent as of 2Q 2016); a continuously improving employment situation (39.9 million employed Filipinos as of April 2016 vs. 39.2 million a year ago); and modest increase in overseas Filipino workers’ (OFW) remittances (up 2.7 percent for the first 5 months of 2016),” Bondoc said.

    He added, “These factors translate to greater purchasing power and higher consumer confidence which bode well for the country’s property sector, particularly for retail, residential, and hotel/leisure segments.”

    Besides higher household consumption, the country’s services sector was another major contributor to the economy’s growth, driven by the robust business process outsourcing (BPO) sector.

    “The services sector is mainly driven by the business process outsourcing (BPO) sector, which is projected to grow between 10 percent and 15 percent per year over the near-term and is the main driver of office demand in the country, taking up about 80 percent of new office space completed,” Bondoc explained.

    “Colliers expects push from the outsourcing sector to continue for the remainder of 2016 as BPO firms‘ demand for office space usually surges during the second half of the year,” the market note said.

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