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RESEARCH
METRO MANILA REAL ESTATE SECTOR REVIEW
METRO MANILAMARKET UPDATE Q2 2018
SNAPSHOTSEconomic Indicators
THE PHILIPPINES SOLIDIFIES ITS POSITION AS A TOP GLOBAL INVESTMENT DESTINATION
business application standards inthree years’ time, with theDepartment of Information andCommunications Technology (DICT)being the chief implementer of thetransition. Other governmentagencies requiring the same data,which is given during the businessapplication process, would simplyhave to access the PhilippineBusiness Data Bank that stores allthe information. The DICT andconcerned agencies are tasked tocreate and maintain this system.
Taking the cue from otherdeveloped nations, such asSingapore and New Zealand thatconsistently ranked as the topcountries in the World’s Ease ofDoing Business Index, thePhilippines has finally startedcreating its own version of afriendlier and a more welcomingbusiness environment for thebenefit of its citizens and investors
Continued on Page 10…
The passage of the Ease of DoingBusiness (EODB) and EfficientGovernment Service Delivery(EGSD) Act of 2018 comes intimely, supporting the currentadministration’s 7 to 8% averageeconomic growth for the duration ofits 6-year term. In the secondquarter of 2018, the countryexperienced economic resurgenceas it outpaced wealthier Aseanneighbors, such as Indonesia andMalaysia. With the aim ofmaintaining the country’s goodeconomic momentum and tocomplement the administration’smassive infrastructure programs,the EODB and EGSD Act of 2018is expected to result to an efficientturnaround in the delivery ofgovernment services for bothbusiness and non-business-relatedtransactions, as well as avert graftand corrupt practices.
The Act presents a stringentgovernmental action on its businessapplication services, with aprovision for automatic approvals ofapplication processes lasting morethan the prescribed period, so longas all documents required havebeen submitted and all applicablefees are paid. The government istasked to gradually elevate its
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GDP Q2 2018
6.0%
5.2%Inflation RateJune 2018
2.7%OFW RemittancesJune 2018
5.9%Avg. Bank LendingJune 2018
3.36%91-Day T-BillJune 2018
53.05Avg. PHP-USDJune 2018
Figure 1Ease of Doing Business Historical World Ranking (Philippines)
Source: Trading Economics
COVER | More investors expected with the ratification of the law on Ease of Doing Business
108
9799 99
113
85
90
95
100
105
110
115
2013 2014 2015 2016 2017
SUSTAINED POSITIVE OUTLOOK FROM AN EXPANDING METRO MANILA OFFICE SECTOR
In the second quarter of 2018, thedemand and supply indicatorscontinued to display a positiveMetro Manila office sector outlook.The overall vacancy rate remainedwithin single digits, which has beenthe case since the first quarter of2010. Q2 2018 vacancy moved to4.51%, coming from 4.91% in thefirst quarter of the year, indicatingcontinuous strong demand in themarket. In addition, net absorptionin the second quarter wasestimated at 20,000 square metersof office space, which brought thetotal occupied space to 4.67 Millionsquare meters of Prime and GradeA office space.
Continuous construction anddevelopment activities is notable inMetro Manila. With new officebuilding completions slated withinthe year, an additional 1.5 millionsquare meters of office space isexpected to add to the presentoffice stock. Most of the upcomingsupply is pre-committed to tenants,who are already anticipating the
scheduled turnover of their newoffice space.
The biggest portion of this year’supcoming office supply will be inTaguig, which includes BonifacioGlobal City (BGC), McKinley Hillprojects and Arca South. In BGC,Daiichi Properties and DevelopmentInc.’s 44-storey project, TheFinance Centre, will be adding morethan 56,000 square meters ofleasable office space to the totaloffice supply in the area. In ArcaSouth, 5 office buildings are slatedfor turnover in the fourth quarter.
At present, Fort Bonifacio boasts ofrecording the largest Prime andGrade A leasable office area amongthe Central Business Districts(CBDs) in Metro Manila. Moreover, itis expected to further expand,taking advantage of the growinginvestor interest in the country. Realestate was reported to be amongthe top 5 destinations ofinvestments in the Philippinesduring the first half of 2018.
Continued on page 10. . .
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OFFICE | Demand for office space remains upbeat and unflagging
FIGURE 3Weighted Average Lease Rate (in PHP) and Year-on-Year Growth Rate (in %)
Source: Santos Knight Frank Research
Source: Santos Knight Frank Research
FIGURE 2Upcoming Supply (in sq.m.)
-
200,000.00
400,000.00
600,000.00
800,000.00
1,000,000.00
1,200,000.00
1,400,000.00
1,600,000.00
2018 2019 2020 >2020
Makati CBD Fort Bonifacio Alabang
Quezon City Ortigas Bay City
TABLE 1Q2 2018 OFFICE DATA
Source: Santos Knight Frank Research
AreaWeighted Avg Lease Rates
(PHP/sq.m./mo.)
Vacancy Rate
Makati ₱1,362.05 2.52%
Taguig ₱1,099.53 3.24%
QC ₱876.94 9.83%
Ortigas ₱697.49 6.41%
Alabang ₱734.85 4.89%
Bay Area ₱767.12 1.14%
METRO MANILA
₱1,010.17 4.51%
7.32%
12.49% 9.73%15.75%
6.72%
5.57%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
0.00
200.00
400.00
600.00
800.00
1,000.00
1,200.00
1,400.00
1,600.00
Makati Fort Bonifacio Alabang Quezon City Ortigas Bay Area
Per
Sq
.M. P
er M
o.
Lease Rate (PHP) Growth Rate
THE METRO MANILA RESIDENTIAL SECTOR MAINTAINS MOMENTUM AMIDST CHALLENGESRESIDENTIAL | Rising demand for residences seen as a product of office sector growth
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In the second quarter of 2018, thePhilippine Gross Domestic Product(GDP) continued its upsurge but ata slower pace. Nevertheless,residential property developers stillenjoy high take-up rates as abuoyant office market resulted to aparallel towering demand forresidences. In Makati and Taguig,monthly take-up went up by 7 unitseach.
An increasing number of companiesare searching for proximate livingspaces near their respective offices.These serve as employee housingfor their expats from mainlandChina. A rise in demand for smallerunits was subsequently noted. Thefirst quarter’s monthly take-up for a1-bedroom unit in Makati was at 9units per month. In the secondquarter, it soared to 19 units permonth. Studio units in Taguig, onthe other hand, had a modest take-up of 2.8 units per month, whichsky rocketed to 35.5 units permonth in the second quarter.
Even for emerging business districtslike Arca South, which claims to bethe next Bonifacio Global City(BGC), absorption is at very highlevels. Most of the projects in ArcaSouth already reached themaximum foreign ownership limit.Avida Vireo Tower 2 is 67% sold,within 3 months from its launchdate. Investors are expectingimmense capital appreciation asthey anticipate the same favorableresponse from the market as thatseen in Ayala Land’s Serendratowers.
With its proximity to the NinoyAquino International Airport (NAIA),presence of various integratedresorts, property developments andactivity centers, the Bay Area inPasay became a most ideal locationfor real estate investment.Consequently, the Bay Areaachieved a 98.52% sell out rate.Supported by robust demand,
the Bay Area is continuouslycommanding escalating prices,notably achieving a 62.2% Year-on-Year (y-o-y) growth rate, which ismuch faster compared to the otherCentral Business Districts in MetroManila. This likewise raised theprices of mid-income projects in theBay Area from the first quarter’sbase rate of ₱123,000 per squaremeter to the astounding ₱165,000per square meter in the secondquarter. Other projects even wentas high as ₱240,000 per squaremeter. However, the limited supplyof purchasable inventoryconstricted the expansion of themarket, causing the decline of theaverage monthly take-up andforcing the market to buy in fringeareas.
Continued on Page 10…
AreaUnits
Sold (%)
Avg.
Monthly
Take-up
Makati City96.04% 22.77
Taguig City96.44% 17.88
Quezon City89.12% 31.16
Ortigas*91.64% 37.83
Alabang75.40% 9.87
Bay Area98.52% 41.11
METRO
MANILA 92.77% 27.06
TABLE 2Q2 2018 Residential Condominium Sales Market Statistics
*Includes parts of Mandaluyong, Pasig, and San Juan
Source: Santos Knight Frank Research
FIGURE 4Indicative Average Selling Prices per Area (PHP/sq.m.)
Source: Santos Knight Frank Research
89,000109,000
68,000 81,000 82,000
165,000
415,000
486,000
160,000187,000 193,000
264,000
0
100,000
200,000
300,000
400,000
500,000
600,000
Makati City Taguig City Quezon City Ortigas Alabang Bay Area
NEW STRATEGIC RETAIL CONCEPTS BOOST
THE METRO MANILA RETAIL SECTORRETAIL | Metro Manila retail sector experiences glory days with the launch of new market trends
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Consumer spending continued toramp up the Metro Manila retailsector in the 2nd Quarter of 2018,causing retailers and developers toexpand in order to continually caterto the Filipino consumers. Therecent report of the PhilippineStatistics Authority showed a rise inconsumer spending of the averageFilipino compared to the previousquarter of the year. A significantincrease in the spending on food,beverages, clothing, and recreationwas noted.
OPENINGS & EXPANSIONS
Retail developers continue toexpand their retail portfolios bylaunching additional shoppingmalls, retail establishments andattractions around Metro Manila.Walter Mart’s ‘W Mall’ alongMacapagal Boulevard in Bay Area,Pasay opened its doors to thepublic last April 2018. W Mall is a12,000-square meter neighborhoodmall which houses Abenson anchorstores such as Abenson ApplianceCenter, Abenson Home, WDepartment Store and Walter MartSupermarket.
Ayala Malls Circuit in the emergingCircuit Makati development startsits operations in July 2018. AyalaMalls Circuit dubs itself as the“Speedway to Entertainment” duethe various innovative attractionsbeing offered such as gaminglounges, go-kart race track, concertgrounds, and cozy cinemas, placedtogether within the former Sta. AnaRace Track.
Mall expansions continue toimprove the shopping and diningexperience, as physical shopsadapt to the rise of e-commerceand online shopping. RobinsonsMagnolia, one of Robinsons Land’spremier lifestyle malls, is currentlyadding more than 10,000 squaremeters of mixed-use leasable spaceto its current 40,000 square metersleasable space. The expansion isscheduled to be completed by2018.
Ortigas & Company is adding 13,000square meters of mixed use leasablespace to Estancia Mall as part of theirCapitol Commons project in OrtigasCenter. The expansion is set to becompleted by Q3 of 2019.
Araneta Center’s Gateway MallExpansion in Cubao broke ground lastAugust 7, 2018. The Gateway 2 projectis set to be a 120,000-square meterpremier lifestyle mall at the heart ofCubao in Quezon City.
Filinvest Development Corporationrecently completed the expansion ofFestival Supermall in Alabang. Filinvestadded 150,000 square meters ofleasable space, making Festival Mall thebiggest mall in the south area.
SM Mall of Asia in Bay Area, Pasayreclaimed the top spot as thebiggest mall in the Philippines asSM Supermalls added another250,000 square meters of grossfloor area to its current 470,000square meters gross floor area. TheMOA expansion started in 2016 tocelebrate the mall’s 10th
anniversary. This expansion featuresa football field, Olympic-size iceskating rink, food hall, and a lot ofupcoming luxury and internationalbrands such as Rolex and IKEA.
NEW BRANDS
Influences from other countriesplayed a vital role in the growth ofthe retail industry. Local andinternational brands continue topenetrate the market, opening upstores inspired by the cultures ofother countries. The most notableupcoming international brand is‘Hawker Chan’ restaurant. Originallycalled “Liao Fan Hong Kong SoyaSauce Chicken Rice Noodle”, thehawker stall in Singapore wasopened by Chan Hong Meng in2009. It has been recognized as the“Cheapest Michelin-StarredRestaurant in the World”. Moreover,Hawker Chan is known for servingonly roasted pork and chickendishes. The brand was brought intothe Philippines by Foodee GlobalConcepts, which is also responsiblefor bringing in Tim Ho Wan andLlaollao. Hawker Chan unveils itsfirst branch in SM Mall of Asia inJuly and another upcoming branchwill soon open in SM North EDSA.
The prominence of Japanese andKorean cultures has been evident inthe growth of the retail sector.Japanese restaurants such asMarugame Udon, Ikkoryu, Tsujiri,Ippudo, Jinsei Sushi Bar & Yakitori,
W Mall (Bay Area, Pasay)Source: Manila Bulletin
Ayala Malls Circuit LaneSource: Circuit Makati
6
NEW TRENDS
Several eyewear and optical brandsare multiplying in different retailestablishments and shopping mallswithin Metro Manila. Japanesebrands, Aojo, Jins, and Owndays,Korean brand, Starfinder Optical,and local brands, Sunnies SpecsOptical and Visualities by EOcompete in selling the finest andbest-designed eyewear to theFilipino consumers.
In addition, retail developers andoperators introduced the “food hall”concept, which gives mall-goers anew dining experience. This newconcept includes a wide range offood choices from different foodstalls usually owned by localentrepreneurs, celebrities, andchefs. It caters to the increasinglychanging tastes and preferences ofconsumers and serves the growing“foodie culture” trend of the presenttime. “Food Halls” is a developedversion of the traditional “FoodCourt” concept, in order to enticeconsumers to visit the mall anddine. Another key objective is to fillout big spaces and decreasevacancy rates substantially.
Food halls are increasinglybecoming popular in Metro Manila.The trend started out with CenturyCity Mall, with the launching of Holein the Wall. Another pioneer is theluxurious Todd English Food Hall inSM Aura Premier which is ownedby American chef, Todd English.
Some of the newly opened foodhalls around the metro are theCommune Food Hall in EviaLifestyle Malls in the Alabang area,The Grid in the new expansion wingof Powerplant Mall in Makati, TheCorner Market in the newlyrenovated The Podium in Ortigas,and the Islas Pinas Food Hall in theDouble Dragon Meridian Plaza inthe Bay Area in Pasay.
An increasing number of retailersare noticing the prevailing trend andare setting up new food halls formall-goers in various areas in MetroManila. Eat Together by Vikings inSM Megamall and the Japan Town& Korea Town in Vertis North inQuezon City are coming soon withnew dining options for the foodies inthe metro.
Collaborative Retail Stores (conceptstore, lifestyle boutique, generalstore) are likewise starting to growin number. These so-called “retail-in-a-retail” establishments are beingdubbed as the future of retail asthey encourage collaborationbetween small, pop-up, and start-up brands. An opportunity tointroduce their products ispresented, giving them a chance toplay with bigger brands in themarket. The collaborative retailstores work by having a generalbrand lease a shopping mall space.Various online shops, smallcompanies and start-up companieswill subsequently rent a smallsection within the rented mallspace.
and Nadai Fujisoba will soon beopened in SM North EDSA (QC),Trinoma (QC), Uptown Mall (BGC),Greenbelt (Makati), Ayala the 30th
Mall (Ortigas), Powerplant Mall(Makati), and Bonifacio High Street(BGC), bringing in authenticJapanese food culture to Filipinos.Filipinos love for Korean culturehave given an opportunity forKorean brands and Korean-themedretail stores to come into the Filipinomarket as brands such as TheSaem International, Hobing, KBingsu, Sam’s Stew, and Snowbingopen their stores in Trinoma (QC),Robinsons Galleria (Ortigas),Glorietta (Makati), Vertis North (QC),and Shangri La Plaza (Ortigas)respectively.
As of the 2nd Quarter of 2018,there are 287 upcoming brands inall of the leading retailestablishments in Metro Manila. Outof 287 upcoming brands, 25% ismade up of clothing brands, jewelrybrands, luxury timepieces, footwearbrands, and apparel brands.Another 35% of the upcomingbrands are food businesses such asrestaurants, coffee shops, teashops, and specialty food stores.The rests are from other retailcategories such as entertainment,health clinics, salons, school andoffice supply brands, computerretail stores, variety stores, conceptstores, collaborative spaces, sportsretail, service stores, furnitureshops, and cosmetics andfragrance stores.
Food35%
Clothing & Apparel
25%
Others40%
The Corner MarketSource: Spot.ph
The GridSource: Our Awesome Planet
Islas Pinas Food HallSource: Santos Knight Frank
FIGURE 5UPCOMING RETAIL SUPPLY PER RETAIL CATEGORY
Source: Santos Knight Frank Research
7
Fort Bonifacio closely followedOrtigas as retail rents in the areaaveraged ₱1,658.33 per squaremeter per month. Notable retailestablishments in Fort Bonifacioinclude Bonifacio High Street retailstrip, Central Square, Uptown Mall,SM Aura Premier, Grand CanalMall, and Market Market.
Quezon City (QC), being the largestcity in Metro Manila in terms ofarea, also has the most number ofretail establishments built in theNational Capital Region. Consistingof large shopping malls such as SMNorth EDSA, TriNoMa, the newlyopened Vertis North, EastwoodLifestyle Mall, Gateway Mall, UPTown Center, and RobinsonsMagnolia, QC boasts of acompetitive average lease ratepegged at ₱1,375.00 per squaremeter per month.
The fast-developing Bay Areahouses a growing number of retailmalls, including S Maison at theConrad Hotel, W Mall by WalterMart, Double Dragon MeridianPlaza, Blue Bay Walk, and the SMMall of Asia. Bay Area averagelease rate is estimated at ₱1,325.00per square meter per month.
Alabang has the lowest averageretail lease rate in all of the ManilaCBDs. The average retail rent in thearea is ₱1,166.67 per square meterper month. Go to shopping malls inAlabang is comprised of FestivalSupermall, Alabang Town Center,and Ayala South Park District.
Notable examples of a collaborativeretail store are The Penthouselocated in UP Town Center, RetailLab located in Powerplant Mall, PopCulture in Ayala the 30th Mall, andThe Park: Fashion + Lifestyle inShangri La Plaza and UP TownCenter. The Penthouse includesseveral online brands comprised ofclothing and apparel, accessories,and cosmetics. Retail Lab is on thehigh-end side as it featuresinternational online shops andproducts of well-known onlinefashion designers, who are lookingto introduce their products to theFilipino market. Pop Culture sellschic clothing and accessory fromonline brands. The Park: Fashion +Lifestyle serves as a stepping stonefor start-up brands, designers, andonline shops as they vie againstbigger brands. The Park: Fashion +Lifestyle wishes to further expandits market reach with theanticipated opening of a newbranch in SM Mall of Asia.
RETAIL LEASE RATES
Retail lease rates in Metro Manilaremain competitive at an overallaverage of ₱1,530.56 per squaremeter per month in the secondquarter of 2018.
Makati CBD, which is the addressof Glorietta 1-5, Greenbelt 1-5,Century City Mall, Powerplant Mallin Rockwell, and the newly openedAyala Malls Circuit in Circuit Makati,recorded the highest average leaserate, out of all the other businessdistricts, at ₱1,975.00 per squaremeter.
Ortigas CBD came in second toMakati with an average lease rate of₱1,683.33 per square meter permonth. Some of the well-knownshopping malls in Ortigas areRobinsons Galleria, SM Megamall,Shangri-La Plaza, The Podium,Ayala the 30th Mall, and EstanciaMall in Capitol Commons.
(Collaborative Retail Store Sample Layout)The Penthouse
Source: Spot.ph
The Park: Fashion + LifestyleSource: Spot.ph
1,375.00
1,683.33
1,975.00
1,658.33
1,325.00
1,166.67
0.00 500.00 1,000.00 1,500.00 2,000.00 2,500.00
Quezon City
Ortigas
Makati
Fort Bonifacio
Bay Area
Alabang
FIGURE 6AVERAGE RETAIL LEASE RATES(PHP/sq.m./mo.)
Source: Santos Knight Frank Research
INDUSTRIAL DEMAND AND GOVERNMENT PROJECTS CONTRIBUTE TO INDUSTRIAL SECTOR PROGRESSINDUSTRIAL | Metro Manila Manufacturing, Logistics and Warehousing in full swing
8
ECONOMIC PERFORMANCE AND INVESTMENTS
The Philippine’s Gross DomesticProduct (GDP) grew by 6% as ofthe second quarter of 2018. Theeconomy grew at a slower pacecompared to the 6.6% growth inthe previous quarter. According tothe Philippine Statistics Authority,Manufacturing, Trade, andConstruction Industry were themain contributors to the country’sgrowth. The Services Sector’sgrowth rate was tallied at 6.6%, thelargest of all the three majoreconomic sectors. It was followedby the Industry Sector, which grewat a rate of 6.3%. The Agriculture,Hunting, Forestry, and Fishing(AHFF) sector continues to slowdown with a growth rate of 0.2% inthe second quarter of 2018.
Investor confidence in thePhilippines is still evident as thecountry’s net inflow of ForeignDirect Investments (FDI) reportedlyincreased in May 2018 to US$1.6billion worth of investments fromUS$677 million in the same periodof 2017. Meanwhile, January toMay 2018 net inflows of FDI grew ata rate of 49% to US$4.9 billion fromUS$3.3 billion in the first fivemonths of 2017. The continuousincrease in investor confidence andinvestment inflows is due to theeconomy’s consistent strongmacroeconomic fundamentals androbust performance.
According to the data presented bythe Bangko Sentral ng Pilipinas,there was a significant growth in themanufacturing industry andtransportation & storage industry inthe first five months of 2018. Themanufacturing industry received netFDI inflows of US$672.46 millioncompared to the net FDI inflows ofUS$7.24 million during the sameperiod of last year representing agrowth of more than 9,000%.
The transportation & storageindustry received net FDI inflows ofUS$4.47 million compared to thenet FDI inflows of US$ 1.05 millionin the same period of the previousyear, which is equivalent to agrowth of more than 300%. Theevidence of growing net FDI inflowsin these industries shows that theindustrial sector in the Philippinesremains buoyant and continues toattract several local and foreigninvestors.
DEMAND FOR INDUSTRIAL FACILITIES
The development of industrialparks, techno parks, ecozones, andwarehouses in Cavite, Laguna,Batangas, Pampanga, Tarlac, andBataan have been as prevalent asthe developments ofcondominiums, office buildings, andretail establishments in MetroManila. The increase in local andforeign investments and largeavailable land mass of rural areasled to the development and growthof economic zones.
The retail sector in Metro Manilahas prompted the positiveperformance of the industrial sectorin the second quarter of 2018.Developers grew their retailportfolios by building new shoppingmalls and retail areas for bettercompetition. There is a projectedupcoming retail supply of more than500,000 square meters of grossfloor area in the form of newly builtretail establishments and retailexpansions, resulting to anincreased demand for storage andwarehousing facilities.
From searching for industrialproperties outside Metro Manila,which was due to the scarcity ofdevelopable land, demand hasreverted back to properties withinMetro Manila. Upsurge in fuel pricesforced companies to look forwarehouses within Metro Manila tolessen logistics costs. Recognizingthe rise in demand, the trendnowadays is to convert oldbuildings into industrial and storagefacilities in order to cater to theincreasing requirements.
ROAD INFRASTRUCTURE PROJECTS
Another intended solution to thesupply problem is the constructionof road infrastructures that willlessen the distance and time fromthe production and storage sites tothe distribution areas of goods. The“Build Build Build” project of thecurrent administration will improvethe access to industrial areasoutside of Metro Manila thusincreasing the ease of doingbusiness in the country. This willconsequently attract local andforeign investors as well as promotethe overall well-being of residentsand guests.
A number of lined-up infrastructureprojects will directly benefit theindustrial sector. The NLEX HarborLink Project is a 21.65 km extensionthat runs from Mindanao Avenue,Quezon City, MacArthur Highway inValenzuela City, C-3 Road inCaloocan City, to CommonwealthAvenue, also in Quezon City.
Valenzuela WarehouseSource: Lamudi
Valenzuela WarehouseSource: Lamudi
9
The 4-segment project will connecthighly industrial areas within MetroManila. The project is vital to themovement and logistics of cargoand inventory as it provides easieraccess to industrial facilities in theCAMANAVA area and it provides adirect route from Port of Manilathrough the Radial Road 10 (R10) inNavotas and NLEX connection.
The NLEX-SLEX Connector RoadProject, on the other hand, isexpected to increase efficiency incargo logistics and present analternative route for cargo trucks toaccess the Manila North Harborand industrial facilities, as well asNAIA and Clark airport, withoutlimitations due to total truck ban.
LEASE RATES
Industrial facilities remain prominentin the CAMANAVA Area (CaloocanMalabon Navotas Valenzuela). It hasthe largest sum of vacant industrialarea at more than 120,000 squaremeters, which is leasable at₱250.00 to ₱530.00 per squaremeter per month.
There are also available industrialfacilities in Bicutan and BarangayBagumbayan in Taguig City with anestimated total of 17,300 squaremeters and leasable at ₱180.00 to₱430.00 per square meter permonth.
Quezon City likewise has 42,200square meters of vacant industrialfacilities ready for lease inBalintawak, Cubao, Sienna, Sta.Mesa Heights, and Mindanao Ave.Rents in these areas are at ₱140.00to ₱530.00 per square meter permonth.
In addition, the highly urbanizedMakati City has a total vacantindustrial area of approximately22,000 square meters in PasongTamo Extension, Guadalupe Viejo,San Lorenzo, and Chino Roces.These properties can be leased for₱450.00 to ₱825.00 per squaremeter per month.
256.19
342.28
568.16
153.85
228.47
241.88
218.62
266.18
312.50
278.57
279.25
- 100.00 200.00 300.00 400.00 500.00 600.00
Caloocan
Las Pinas
Makati
Manila
Muntinlupa
Paranaque
Pasig
QC
San Juan
Taguig
Valenzuela
Source: Department of Public Works and Highways
Source: Department of Public Works and Highways
Source: Santos Knight Frank Research
FIGURE 7AVERAGE LEASE RATES OF INDUSTRIAL PROPERTIES (PHP/sq.m./mo.)
Continued from Page 3 Office
Constantly rising rents furthersupports market optimism in theMetro Manila office sector. Overallweighted average asking leaserates grew 2.42% quarter-on-quarter and 10.6% year-on-year toabove P1,000 per square meter permonth. The second quarter figurewas pegged at P1,010.17. Althoughthe Bay Area has been verypromising, Makati still holds thehighest asking rate of P1,362.05per square meter per month,followed by BGC with P1,099.53per square meter per month.
The Chinese gaming industrycontinues to display strength withan increasing presence in MetroManila, especially in the Bay Area.Nevertheless, the Business ProcessOutsourcing (BPO) industry willkeep on driving office space take-up evidenced by constant largecommitments from IT and BPOcompanies. BGC is recognized asthe most dominant destination forIT-BPO companies. Traditionalheadquarters and front officeslikewise occupy a sizable portion ofthe total office stock but areconsidering an upgrade to newerand modern buildings available inthe market.
While the threat of automationchallenges the BPO sector, certainfirms wish to address the issue byimproving employee skillset andgoing up the value chain with moreadvance type of services. Voiceservices, however, remain essentialto various BPO companies, ashuman interaction is preferred anddesired by majority of customers.
Continued from Page 2 Cover
alike. The passage of the EODBand EGSD Act of 2018 is presumedto attract even more foreigninvestors. Additional investmentsare expected to come in withChina’s Belt and Road Initiative, a21st century revival of the ChineseSilk Road, wherein Chineseinvestors are looking beyond Chinato trade and invest. The act likewiseentices local populace to developtheir own business ventures, takingadvantage of the country’s strongconsumer base, which has beenproportionally growing with theentire Philippine GDP for the pastyears.
The Philippine real estate industry isconstantly booming, with increasingcommitments from offshorecompanies, continuousdevelopment of shopping malls andretail strips in the countryside, andnew residential project launches,backed by numerous pipelineinfrastructure projects. This is tofurther continue with the passage ofthe EODB and EGSD Act of 2018.Moreover, land acquisition anddevelopment would be ideallyeasier, paving the way forbusinesses in the country to expandand extend to the countryside, andthereby increasing the land value inother high potential areas.
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Continued from Page 4 Residential
Constant competition, risingdemand and diminishing supplypulled up the second quarteraverage selling price per squaremeter of residential apartments inMetro Manila. Affordablecondominiums posted a 21.7% y-o-y growth in average selling prices.The price range was from a low of₱68,000 per square meter to a highof ₱104,000 per square meter. Inaddition, demand for luxurycondominiums led to a significantlyhigher y-o-y price growth of 29.5%.Luxury condominium prices rangefrom ₱154,000 to ₱486,000 persquare meter. High-end and mid-income projects likewise recordedprice increases of 9.3% and 11.5%respectively.
Around 24 projects (10,781 units)were turned-over in the secondquarter of 2018, which is 5% higherthe previous quarter’s 10,288 units.Towers that were launched in thesecond quarter include: FameResidences Tower 4 and KaiGarden Residences- Hinoki Buildingin Mandaluyong City, Avida VireoTower 2 and Park Cascades Tower2 in Taguig City, and Callisto Tower2 in Makati City.
Forbes Media TowerSource: Century Properties
30.035.040.045.050.055.060.0
2Q 2
016
4Q 2
016
2Q 2
017
4Q 2
017
2Q 2
01
8
Q2 2018 Q3 2018
FIGURE 8BUSINESS CONFIDENCE INDEX
Source: Bangko Sentral Ng Pilipinas (BSP)
Santos Knight Frank Research provides strategic advice, consultancy services and forecasting to awide range of clients worldwide including developers, investors, funding organizations, corporateinstitutions and the public sector. All our clients recognize the need for expert independent advicecustomized to their specific needs.
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Metro Manila Market Update Q1 2018
Metro Cebu Market Update 2H 2017
The Wealth Report 2018
Global CitiesThe Report 2018
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