Santos Knight Frank on real-estate forecast

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In Photo: Set to be launched this June, the LEE D-certified Philam Life tower in Cebu stands to become the city’s first prime building.

THE Santos Knight Frank company, which was formerly known as CBRE Philippines, was established by Rick Santos, the chairman, CEO and owner in Manila 23 years ago as the country’s first fully integrated real-estate service provider.

One West Aeropark is within Global Gateway Clark (GGC), a state-of-the-art, 177-hectare master planned, mixed-use Business Center of Excellence in Clark, Pampanga.

Headquartered in London, Knight Frank was founded in 1896 and it is the largest privately owned global real-estate consultancy, with more than 400 offices in 59 countries across the globe. This includes a strategically important partnership with a Newmark Grubb Knight Frank (including the market-leading West coast operations of Newmark Cornish & Carey) in the United States.

The Philippine real-estate sector grows in parallel with the country’s vibrant economy, which continues to attract inbound investments and stays on as one of the fastest-growing economies in the Asia-Pacific region. The growth is particularly evident in the Information technology-busniness process outsourcing sector (IT-BPO), which continues to display resiliency. More foreign firms from countries like China, Qatar, Mexico, Israel, the United Kingdom and Canada are eyeing to invest into the IT-BPO industry in the Philippines, according to reports during the first three months of the year. These are expected to further drive real estate growth in secondary cities outside Metro Manila.

The country remains as the most attractive inbound investment destination in the region for IT-BPO companies, which are eager to capitalize on the country’s favorable demographics, strong dollar, competitive labor cost and continuous infrastructure development.

Part of a mixed-use development in Araneta Center, Quezon City, Cyberpark 1 is a prime location for business-process outsourcings and traditional offices within a well-planned community offering office, retail, hotel, residential and entertainment.

“We expect the IT-BPO sector to sustain its upward trajectory, especially as the government paves more growth opportunities in areas such as Clark, Cebu and Iloilo through an aggressive infrastructure program,”Santos said.

Coworking space: A new trend

Over the past five years, the concept of “Coworking Space” has emerged to meet a new type of demand for office space. Previously, professionals and small businesses were often forced to choose among leasing a traditional office space, renting a room from a serviced office, or working from within coffee shop. But with the recent advent of coworking spaces, these tenants now have an alternative.

Coworking spaces are similar to traditional serviced office providers in form. But whereas serviced office tenants often rent private rooms. Coworking spaces encourage all tenants to mix in an open-seating environment. Amenities, such as Wi-fi, reception and event gourmet coffee, are provided to the tenants, often with an all-inclusive rate. Coworking lease terms are usually shorter than those for traditional office, and the design of the spaces usually reflects the young, tech-savvy professionals that are found within.

At present, there are at least 30 coworking spaces in Metro Manila, with the majority concentrated in Makati City (14), Bonifacio Global City (eight) and Ortigas (three). Some of the more popular coworking spaces include Acceler8, vOffice, and A-Space Manila. Web sites with an AirBnB-like search concept are, likewise, present in the market, which makes finding available coworking spaces even easier for potential tenants. Typical coworking space rates in Makati City can range from as little as P400 up to P1,200 per person per day.

“We believe the coworking space trend will grow further, thus creating a relative impact to the office sales in the future. Millennials would also be a valuable aspect in the expansion of this concept, as 35 percent of the 2015 Philippines population are comprised of people aged 15 to 34. Millennials would soon be dictating the office market, its concepts and the growth of new businesses,” Santos said.

Asian Investors set eye on luxury and high-end residential properties. “The luxury and high-end residential markets are set to grow as interest from foreign investors, high net worth individuals and developers continue to increase. Investors from China, Japan, South Korea, Singapore, Indonesia, Hong Kong and Malaysia have expressed interest in buying residential and office condominiums,” Santos added.  Of the 34,143 high-end residential units floated in the market, 77 percent has already been purchased. While demand is driven by foreign investors, Santos Knight Frank noted that the low-interest environment, flexible-payment schemes and the weaker peso also attracted affluent end-users to acquire properties. Indicative selling price per square meters of high-end residential units currently ranges from P120,000 to P185,000. The Metro Manila Luxury and high-end residential market remains concentrated in the country’s leading central business districts, Makati and Bonifacio Global City.

Forecast on the Philippine retail

With growing Filipino middle class supporting the Philippines’s consumption-based economy, the growth of the retail sector has seen developers, such as Vista Land and Double Dragon, ramping up the portfolio through the massive expansion of their retail business. The retail component of Double Dragon’s Meridian Plaza mixed-use development and other Ayala Malls, namely, Vertis North Park, Park Triangle Mall and Cloverleaf Mall are some of the upcoming retail developments to watch out for.

Together with the expansions of Robinsons Galleria, Festival Mall and SM Mall of Asia, upcoming retail spaces sum up to approximately 835,000 sq m in 2017 alone. Retail openings under food and beverage—ranging from fast food and restaurants to coffee shops, account for about 63 percent of the total retail openings in the first quarter of 2017. This followed by clothing and apparel with 26 percent. The remaining percentage is distributed among home ware, consumer electronics, department stores and other consumer services. In turn, the growth of retail has spilled over to the industrial sector, where storage and logistics have become a new area of expansion among developers.