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Top10 Predictions 2015 FINAL
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Top 10 Predictions for 2015 Colliers International Philippines January 2015
Forecasts from key international financial
institutions (WB, IMF, ADB) state that the country
is set to rebound from the lower-than-expected
GDP growth recorded in 2014, despite the
downward adjustments that have been made the
past year. Many economists and analysts are in
consensus that the country will become the top
performing economy in the ASEAN region in
2015.
The acceleration is seen to come from greater
fiscal spending as the government adjusts to the
new processes brought about by the DAP
debacle. In addition, spending towards
rehabilitation and recovery programs in areas
affected by national calamities is seen to
accelerate by in 2015, thereby aiding economic
growth. Falling oil prices will also have a net
positive effect on the economy.
1. Economy to rebound from 2014s lower-than-expected growth
2015 Forecasts
IMF: 6.3%; WB: 6.7%; ADB: 6.5%
Source: World Bank, International Monetary Fund, Asian Development Bank
Colliers observed a continuous decrease in
condominium sales take-up in Metro Manila, which
peaked in 2012. While take-up rates have generally
stabilized and that some areas such as Fort Bonifacio
remain popular with buyers, developers are seen to
keep practicing cautious optimism in their residential
launches particularly in Metro Manila.
To compensate for the softer outlook in Metro Manila,
developers will continue to venture into residential
projects in second-tier and third-tier cities all over the
country, where demand comes from end-user buyers.
The markets may be smaller compared to Manila but
more stable in terms of end user housing demand.
Moves by the BSP to forestall a potential real estate
bubble, such as the bank real estate stress tests and a
cap on loan collaterals, may expand further to control
the shadow banking activities of real estate
developers, possibly making capital for home purchases
less accessible.
2. Residential developments move
outwards of Metro Manila for growth
Demand will remain strong in areas
outside Metro Manila, where housing
is much needed by end users.
Source: Colliers International Philippines Research
Infrastructure plans of the national government
shall continue to influence developer strategies in
2015. The rollout of these projects are seen to be
accelerated as the Aquino administration winds
down in 2016.
The Cavite-Laguna Expressway (CALAx) and the
Laguna Lakeshore Expressway Dike (LLED) are
two of the most anticipated infrastructure projects.
These projects encourage future urbanization and
development, thereby attracting developers to
acquire land in strategic locations around the
upcoming infrastructure.
Developers with land banks in the vicinity of these
projects will be motivated to proceed with their
planned developments, as they stand to benefit not
only from the ease of access the projects provide
but also from the eventual increase in land values.
3. Infrastructure plans in Mega Manila
shape developer expansions
Nine infrastructure projects are in the
various stages of developments,
from bidding to construction.
Source: Colliers International Philippines Research, PPP Center
Well aware that the real estate industry is one of
the most cyclical, major real estate developers
have begun searching for other revenue streams
to sustain the growth rates that they have enjoyed
during the past few years.
Among the developers with diverse real estate
plays are Ayala Land, Megaworld and Filinvest.
These developers have expanded their portfolios
beyond residential developments to include retail,
office, hotel, and industrial projects, and to some
extent even medical and educational projects.
This strategy proves pivotal to their sustained
growth, since having a diversified portfolio of real
estate products enables them to reap the benefits
from growing sectors of the property market, while
at the same time shields them from any corrections
in other sectors that are experiencing stress.
4. Developers to expand product
offerings to sustain growth trajectory
National developers have started to
expand their portfolio into more
sectors of the real estate market.
Source: Colliers International Philippines Research
Renewed interest in the country as a
manufacturing location has sprung this year
due to an improved macroeconomic
environment as well as increasing
manufacturing costs in the region.
Manufacturing firms are seen to expand in
2015, as the country gains advantage from
the ASEAN integration, particularly in light
manufacturing, ship building, and
automotive manufacturing.
While provinces south of Manila have
benefitted from the resurgence of the
industrial sector, the completion of critical
infrastructure that improve connections to
the north will spur industrial activity in
provinces such as Bulacan, Pampanga and
Bataan.
5. Industrial sector to sustain momentum
as manufacturing surges ahead
Industrial park developers have expanded
their projects, either opening up new
portions of their industrial estates or
acquiring more land for development.
Source: Colliers International Philippines Research
Mindanao has generally lagged the rest of
the country in terms of investment due to the
unstable peace and order situation. Hope is
high that the environment will improve with
the anticipated passage of the Bangsamoro
Basic Law in 2015, which is seen to usher in
long term stability, facilitating investment
and the delivery of basic social services.
Davao is emerging as the frontrunner to
benefit from the passing of the law, as the
local economy is ripe for further expansion
and development.
With a thriving real estate market, an
abundant pool of quality labor, and a more
stable political situation relative to the rest of
Mindanao, Davao is set to attract future
investors to operate in the area.
6. Davao shows potential as the next
property investment destination
A landmark agreement between the
government and the MILF will lead to
long term progress.
Source: Colliers International Philippines Research
The number of green building applications has
been increasing since 2013, indicating that
property developers have been responding to a
global advocacy to reduce the environmental
impacts of building construction and operations
in light of worsening environmental conditions
and climate change.
Global companies that pursue green and
sustainable building operations as part of their
corporate social responsibility programs have
convinced developers to consider incorporating
environment-friendly features in their buildings.
Out of the 89 pre-certified LEED projects in the
Philippines, 61 projects located in Metro Manila
are expected to be completed within the next
three to five years, emphasizing the growing
influence and importance of green buildings
among building occupants and tenants.
7. More green and innovative building
projects will be seen in the metropolis
25 buildings were certified as LEED
by the US Green Building Council as
of 2014.
Source: US Green Building Council
Once known for its breathtaking sunset view, Manila Bay
went through a series of land reclamations in the early 20th
century, which for better or for worse have changed the
landscape in the area. The construction of the Cultural
Center of the Philippines (CCP) Complex in the 1960s has
had the most impact, with most of the buildings in the
complex relegated for artistic, government or civic use.
Over the years, reclamation of the bay has turned to more
commercial uses, the most famous of which is the SM Mall
of Asia Complex which was officially launched in 2006. This
was followed by the PAGCOR Entertainment City, a casino
district housing four integrated leisure and gaming
developments.
Supported by four new infrastructure projects within the
vicinity and coupled with better investment yield
opportunities stemming from lower land values, the Bay
Area is expected to transform into a fully developed
business and leisure district, providing a viable alternative
to the Makati and Fort Bonifacio CBDs.
8. After a 50-year hiatus, Metro Manila
development focuses on the Bay Area
Reclamation projects within the
Pasay-Paranaque portion of
Manila Bay started in the 1990s.
Source: Colliers International Philippines Research
Prominent retailers such as Robinsons Retail and SSI
Group have had a successful year in the stock market
as their revenues have reached record heights.
With Double Dragon introducing neighborhood malls in
underserved markets in secondary and tertiary cities,
competition will shift to small format shopping centers
as the top retail players grapple for market share.
Eager to sustain their phenomenal growth, retailers will
usher in more brands, both local and foreign. On the
other hand, more foreign retailers will follow H&Ms
strategy in establishing their own operations instead of
seeking local partnerships, especially with the ASEAN
integration opening up the market further.
Competition among convenience store brands is also
expected to heat up further, as local retail giants
introduce foreign brands such as Lawson of Japan
(Puregold) and Alfamart of Indonesia (SM).
9. Retail development competition to
further intensify
Developers continue to be bullish
on retail space development, with
close to 180,000 sqm of retail space
for completion in 2015.
Source: Colliers International Philippines Research
More hotels are expected to be introduced
in 2015, with close to 6,000 rooms slated for
completion. A significant number of hotels
slated to open in 2015 are in key business
districts in Metro Manila, thereby addressing
the need not only for leisure travelers in
PAGCOR City but also for business
travelers.
Development of more resort hotels in tourist
hotspots are anticipated.
While the entry of more foreign hotel flags is
encouraging, the government has to step up
in attracting more international tourists after
a lackluster performance in 2014, which
Colliers estimates will only reach 4.8 million
international tourists, far behind the 6-million
target.
10. Tourism growth projections further
encourage hotel development
International hotel brands have
included the Philippines in their
expansion plans.
Source: Colliers International Philippines Research
As much as Colliers would like to be wrong, the
problems that plague the airport system in Manila (as
well as some airlines) will continue to dissuade
international travelers and stifle tourism growth.
Since 2010, the number of international flights
arriving and departing at NAIA has risen by 8.7%
annually, while as of November 2014 growth was
almost 5% YoY. Meanwhile, no definite initiatives
have been made to increase the number of runways.
Without a clear and concrete plan to fix the capacity
of NAIA or construct nearby airports, the country may
not be able to accommodate more tourists, missing
tremendous opportunities brought about by the
current tourism boom.
Meanwhile, direct flights to international airports in
the provinces will continue to increase as a response
to the lack of capacity, particularly in tourism hotspots
such as Cebu and Boracay (via Kalibo).
but airport woes will continue to impede actual tourist growth.
As of November 2014, NAIA was
able to accommodate 41,208
arriving flights, with 6.87 million
passengers.
Source: Colliers International Philippines Research; Manila International Airport Authority
Thank you.
About Colliers International Colliers International is a leader in global real estate services, defined
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Colliers International | Philippines
11F Frabelle Business Center
111 Rada Street Legaspi Village
Makati City, Metro Manila | Philippines
TEL +632 888 9988
FAX +632 858 9001
Romeo Arahan
Research Analyst | Philippines
+63 2 888 9988
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Julius Guevara
Director | Philippines
+63 2 888 9988
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