The country’s property sector continues to see rapid growth despite slower economic expansion thanks to the booming real estate office market, according to a report released by real estate consultancy group Colliers International.
Office rents in the major Central Business Districts such as Makati and Bonifacio have seen noteworthy increases in the second quarter of 2015.
Premium rents in the Makati CBD grew by 2.3 percent in the second quarter to P1,202 per square meter. Likewise, Grade A building rates in the Makati CBD escalated by 1.9 percent to reach an average monthly rent of P894 per square meter.
Economic growth in the first quarter slowed to 5.2 percent year-on-year due to weak exports, the decline in public construction, lower remittances and government underspending.
This has led economists to also scale down their end-2015 growth forecasts to an average of 6 percent. The Philippine economy grew by 6.1 percent in 2014.
Despite slower-than-expected economic growth in the first quarter, the real estate sector continues to advance briskly driven by high demand in the office property market, which is attributed to the booming business process outsourcing (BPO) industry in the country, Colliers said.
“Encouraged by incessant demand from the BPO industry, developers are slated to construct unprecedented levels of office space in the various established and emerging business districts in the medium term,” it said.
The report said an area of about 580,000 square meters of new office space is expected to be delivered by end-2015 while around eight office buildings were expected to be completed in the second quarter of the year. However, only two were able to deliver, namely the Five E-Com Center by SM Prime Holdings Inc. and the Uptown Bonifacio development by Megaworld Corp.
The Manila Bay-based Five E-Com Center was able to contribute 38 percent of office stock in the reclamation area alone due to its significant net usable size of 75,000 square meters, while the Bonifacio Global City-based Uptown Bonifacio consists of several office buildings occupying 27,000 square meters of usable area.
“If target office delivery dates are met, each year between 2015 and 2018, stock will surpass the previous record of new office supply,” the report said.
“Office stock in Fort Bonifacio is anticipated to double in the next three years, and the Manila Bay Area is set to expand by 140 percent in the same period,” it added.
Meanwhile, established CBDs, such as Makati, are expected to have lower office supply rates in the coming years due the lack of developable land and prohibitive land prices.
Julius Guevara, director of Colliers International Research and Advisory, noted that the Philippines remains one of the cheapest countries in terms of office rents in Asia, but it has outstripped Seoul in South Korea and Kuala Lumpur in Malaysia in the second quarter of 2015.
According to Colliers International’s office report on Asia Pacific in the second quarter, prime office rental rates in the Philippines go for $25.70 per square meter per annum.
Guevara said this could be attributed to the cheaper manpower rates in the country.