The office market stood as the “major mover” among property markets in the Asia Pacific region in the third quarter of the year, driven by the sector’s growth in the Philippines and Hong Kong, real estate consultancy firm Colliers International-Asia Pacific said in a new report.
“An important story at the moment is certainly of the office sector,” the report stressed.
Colliers said the office market was the major mover among property sectors in the Philippines and Hong Kong during the third quarter of 2016.
The real estate consultancy firm also expressed its optimism for the continued growth of the office sector in the next quarter of the year.
“It is the sector to watch in Q4 across Asian markets from Shanghai, Beijing, Chengdu, Taipei, India, to Singapore,” Colliers said.
According to Colliers International-Philippines executive director for investment services Ieyo de Guzman, the growth of the Philippine office sector is driven by the strong economy.
“The accelerated economic growth was echoed by the office property market, where strong demand and high occupancy levels have been sustained by ‘outsourcing and offshoring’ businesses,” de Guzman said.
The country’s economic growth was primarily driven by increased foreign investment inflows, higher household expenditure, modestly increasing remittances from overseas workers, and the intensification of public infrastructure spending, according to de Guzman.
With the high demand for office spaces coming from the outsourcing sector, Metro Manila’s main business districts posted a 3 percent vacancy level across all grades during the quarter, according to de Guzman.
She added that vacancy rates are forecast to remain tight until the end of the year.
“As a result, rents continue to rise and are forecast to rise 8 percent to 10 percent over the next 12 months,” the real estate analyst said.
Meanwhile, aside from the office market, Colliers also expressed its bullish outlook for the Philippine retail and industrial sectors.
“The retail property sector is likewise on an upward trajectory, backed by steadily improving purchasing power and consumer confidence. International retailers are expanding their presence in the country, as are restaurant chains,” de Guzman said.
She noted that high demand for retail spaces from both foreign and local brands will spur the continuing trend of township development and mixed-use property with retail complexes as integral components.
The growth of the Philippine retail market is also likely to create demand for the industrial property sector.
“Demand for warehouse space, distribution centers, and logistic hubs is increasing significantly,” de Guzman said.
Also, the country’s higher infrastructure spending also plays a part in the demand for industrial spaces.
“The demand from manufacturers and other industrial operators for expansion space will be heightened by the implementation of vital infrastructure projects,” de Guzman said.
By contrast, the residential property market is the only property sector that has a less optimistic outlook.
“The outlook for residential condominiums remains subdued due to concern over a supply overhang,” de Guzman concluded.