The country’s property sector grew “more aggressively” in the first quarter of the year than in past quarters mainly due to continuous foreign currency remittances from overseas Filipino workers (OFW) and the strong performance of the business process outsourcing (BPO) sector, a property consultancy firm said on Wednesday.
“The Philippines’ strong macroeconomic environment—manifested in its young and educated demographic, strong private consumption, growing BPO industry and OFW remittances—continue to shield the country from external shocks,” Rick Santos, president and chief executive officer of CB Richard Ellis Philippines Inc. (CBRE Philippines), said in a briefing.
“The country will be one of the real estate growth leaders in the Asean integration,” he added.
CBRE Philippines reported that segments of the property sector—residential, office, retail and hospitality—were boosted by remittances and the BPO sectors.
Santos said the commercial office and retail sectors stand to benefit the most from the Asean market integration, which is due to start next year.
The hospitality sector is also seen benefiting from the robust tourism segment on the back of the series of Asia-Pacific Economic Cooperation (APEC) meetings being held in the country.
For the office sector, CBRE Director John Corpus said strong demand from the BPO sector—with Manila being the top 2 BPO cities in the whole world next to Bengaluru in India—is spicing up the offices segment, with average lease rates growing by 1.45 percent annually.
Corpus said Fort Bonifacio was the fastest growing BPO site, expected to take up 45 percent share of the 784,378 square meters additional office space in Metro Manila this year.
“Manila is well positioned for [the setting up of]Asean head offices. Escalating rent rates are supported with growing demand for high quality offices,” Corpus said.
In terms of industrial segment, CBRE Philippines director Kash Salvador said more firms from Japan and the United States are moving their manufacturing facilities into the Philippines.
He said the Philippines is a good location for these firms, taking up the bulk of demand among the Southeast Asian countries with only Vietnam as its competitor being the “cheaper” location
But Santos thinks the Philippines will still retain its dominance in the industrial location in the minds of these foreign firms as the country offers prime locations at reasonable costs compared with Vietnam and other Southeast Asian locations.
The retail and hospitality sectors, on the other hand, are also mostly driven by a good flow of remittances that fuel consumer spending and the tourism sector.
CBRE Philippines’ Morgan McGilvray said that moving forward, basic services at 24/7 will become a trend, as well as the gaming sector ensuring the influx of the luxury brands.
Also, John Custodio of CBRE Philippines said hospitality sector will benefit much from the increased activity in the tourism sector, most especially with the series of APEC meetings being held in the country.
“The Asean integration will open up the Philippines to a free flow of goods and services, particularly in the four Fs: food, fashion, furnishings and fun,” The CBRE Philippines president said.
“The continuous transformation of cities into business landscapes will only strengthen the position of the country as an investment destination in the coming years,” Santos added.
Overall, CBRE Philippines said the Philippines real estate sector is seen to remain strong and stable for the remainder of the year empowered by the expanding BPO industry, OFW remittances, boosting tourism and growing middle-income market.