PH property yields luring investors

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Higher gross yields from the Philippine property market continue to entice foreign investors, a recent study by property consultancy firm Colliers International Philippines showed.

“The Q2 2017 Global Cap Rate Report” released by Colliers’ Valuation and Advisory Services showed that yield of 7.7 percent in the Philippines outshines Asia’s average range of 3.8 percent to 5 on prime locations.

This is higher than Shanghai’s 5 percent, Tokyo’s 4.5 percent, Singapore’s 4 percent and Hong Kong’s 3.8 percent.

In the Philippine residential segment, the 5.5 percent yield is second only to Vietnam’s 5.7 percent, outpacing Tokyo’s 2.7 percent, Singapore’s 2.1 percent, and Hong Kong’s 2 percent.


“These attractive yields are enticing Japanese property firms to be more aggressive in investing in the local real estate sector. Among the major Japanese real estate players that are expanding footprint in the country include Hankyu Realty Co. Ltd., Mitsui Fudosan, Nomura Real Estate Development Co., and Isetan Mitsukoshi, ” according to Colliers.

In July, listed real estate developer Federal Land Inc. partnered with Japan’s Nomura Real Estate and Isetan Mitsukoshi for a P20-billion mixed-use development project in Taguig City.

The project, called the Sunshine Fort, will rise within the 10-hectare Grand Central Park development of Federal Land in Bonifacio Global City, with the groundbreaking expected in 2018.

Hankyu Realty signed a joint venture deal with PA Alvarez Properties and Development Corp. to build an 11-hectare township project in Dasmariñas, Cavite.

The 37-hectare project involves building more than 800 housing units.

“Cavite is an ideal location for residential projects as its population is growing by an average of 3.4 percent annually, double the national average. Per capita income in the Southern Luzon region, where Cavite belongs, has risen by 4.7 percent per annum over the past two years,” Colliers said.

“Among the key drivers is the sustained flow of overseas Filipino workers (OFW) remittances, with Southern Luzon being one of the major sources of migrant workers. In 2016 alone, the region’s OFW deployment grew by 7 percent. Moreover, sections of Cavite remain as a support community to the country’s capital, thus sustaining the demand for affordable residential projects,” it noted.

Ono the other hand, Mitsui Fudosan partnered with Rockwell Land Corp. for a P9- billion residential project in Quezon City, “The Arton by Rockwell.”

“Local and Japanese companies mutually benefit from these joint venture projects,” Colliers International Philippines Deputy Managing Director for Investment Services Ieyo de Guzman said.

“While Japanese firms are enticed by high yields derived from Philippine projects, local developers gain by being vouched for by prominent Japanese brands known for their precision and high architectural and engineering standards,” she added.

“Over the near to medium term, we see the entry of more international developers given the Philippines’ rising status as a real estate investment hub in the region. Aside from the Japanese companies’ partnerships with P.A. Alvarez, Federal Land and Rockwell Land, several property firms from other parts of Asia have expressed interest in investing in the Philippine real estate sector and team up with local developers.

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