KMC MAG Group Midyear Market Update
18
Midyear Market Update Media Round Table | August 28, 2014
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Residential market There are high hopes for the residential market, especially for the coming year where supply is expected to reach its peak. With this, homeowners will have more than a few options. The market will also favor the growing middle class. Condominium developments cater more to the middle-income market. With the buoyant market demand, occupancy rates are expected to be high. As the middle class becomes more empowered, this will drive retail developers to expand further. According to Angela Manese, KMC Mag Group’s Residential Division Manager, properties in Metro Manila are more affordable compared to other countries in terms of cost per square meter. Foreigners who have acquired residential units here rent out the properties or wait for the time till they can sell it at a higher price. Some of them like visiting and living in the country and have decided to buy a property not just for investment but for personal preference as well. Overseas Filipino workers who consider buying a property here should first think of how the property will be used, whether they’re planning to rent it out or live in it with their family eventually. When selecting a property, among the prime considerations should the track record of the developer. And if the property will be rented out, location should play an important role in the decision since most renters, usually expats, workers, and students, aim for accessibility. Finally, buying low and selling high in the current market can be difficulty. As such, investors should set realistic expectations and should consider expanding the timeline for maximized returns on investment. Office market The IT-BPO and KPO industry, along with small- and medium-scale businesses, creates a higher demand in the leasing market. They have been driving growth particularly in serviced offices. According to McCullough, the boom of serviced offices has much to do with the lower risk and lower capital associated with this option. New enterprises are able to set up operations and try out the market without dealing with higher cost and too much risk, making serviced offices a very attractive option. Aside from Metro Manila, Pampanga, Cavite, Laguna, and Bulacan are also pulling in more foreign investments, providing more options for various ventures. Their business-friendly policies, home-grown talent, and improved infrastructure help turn these locations into viable investment destinations, especially since office supply in CBDs is expected to be low until 2016. Hotel market The hotel market is also expected to remain active, with the growth in tourist arrivals over the next few years. With this, hotel room supply will increase to about 9,500 rooms, with current developments on the pipeline. Market developments include the construction of boutique hotels and luxury hotels in top city locations.
Transcript of KMC MAG Group Midyear Market Update
Midyear Market Update
Media Round Table | August 28, 2014
real estate market overview
Despite slowdown in economic growth, real estate
sector remains bullish
Multi-billion dollar expansion programs
Major transactions
Joint ventures with international investors
Asset market remains challenging for purely
investment-minded players
Township projects
Southwoods City
Clark Green City
Arca South
Circuit Makati
Aseana City
Vista City
real estate market outlook
Outlook remains very positive
Economy is expected to grow 6.0% to 7.0%
Investment activity to remain robust
Focus to remain in CBDs
Strong leasing demand from IT-BPO sector
Shift in direction for residential developers
Luxury to lower to mid-end segments
Retail holds opportunities for rise in rental rates
residential market update
Continues to grow at a steady rate
Shift of direction for developers from luxury to
lower to mid-end market
Middle-income markets keeps market demand
buoyant
Residential supply to peak this year
Residential rates are expected to rise at a
moderate rate
residential market bubble?
No bubble in residential market
Backlog of housing will keep the market
sentiment positive
Rising middle-class
Wealthy locals
OFWs
Buying powers supported by actual buying power
and not loans
Overseas interest remains strong as Metro
Manila offers more attractive yields
Cooling measures in Singapore & Hong Kong
accelerated the overseas demand
how to plan your next residential investment
How will you make money out of a residential investment?
Capital appreciation
Rental yields
Ancillary investment income
What kind of property are you looking for?
Apartment building
Condominium
House and lot
Townhouse
What is the source of your capital?
Retirement funds
Savings
Income form other investments
Mortgage
retail market update
Opportune condition for retail
sector
Rise in domestic spending and
purchasing power
OFW remittances
Growing middle-class
Good employment situation
Retail sector remains bullish in
modern retail formats (e.g.
Convenience stores and
hypermarkets)
Lawson Inc. and Puregold
partnership
retail market drivers
New market entrants & bullish
expansion of international brands
(H&M, Sephora among others)
Diversification of tenants in retail
spaces
Unique offerings compared to
common establishments (banks,
convenience stores, etc.)
Created by rising middle class
Usually first-time business
owners
retail market outlook
Aggressive expansion by developers inside and
outside of Metro Manila
Ayala Land, Inc. opens the Wellworth
department store, a joint venture with Rustan’s
SM Group plans to invest PHP 38.8B into the
retail sector for this year alone
By end of the year, SM’s portfolio will
amount to half of total retail space (7.5M
sq.m)
Will concentrate on areas outside of Metro
Manila
serviced office market update
BPO & KPO operations continue to be
main growth driver
Continuous government support
Government agencies (e.g. BOI,
PEZA, etc.)
Industry associations (e.g. IBPAP,
CCAP, HIMOAP, etc.)
Business chambers (e.g. ECCP,
FCCP, NBCP, BCCP, etc.)
Small and medium enterprises (SMEs) as
also large customer base
Attractive office option since it offers low
risk and low capital factors
serviced office market outlook
Serviced office concept seen expanding to Next
Wave Cities:
Metro Bulacan
Metro Pampanga
Metro Cavite
Metro Laguna
Serviced office market to remain attractive as
prime office supply in CBDs will remain low until
2016/2017
office market update
Leasing market retains a positive atmosphere, mainly driven by IT-BPO sector
Demand for office space remain concentrated in Metro Manila
Cebu and other second-wave cities continue to make themselves more attractive
Low vacancy levels remain to be a positive problem
Market is expected to absorb 280,000 sq.m of the new supply (300,000 sq.m)
office market drivers
IT-BPO continues to be main driver of the office
market
No. 2 top IT-BPO outsourcing destination in the
world
The industry has at least 5 years left in the sweet
spot
Majority of population is expected to join
workforce
Growing number of middle-income families
No foreseeable competitors in voice outsourcing
China may be a threat for backend outsourcing
disaster preparedness
Increasing strength and frequency of typhoons
and earthquakes
Companies now focus on business continuity
Next wave cities have become secondary sites
Case study
Multinational insurance company outsources
regional back-end office to the Philippines
8,000+ sq m head office located in BGC, Metro
Manila
Expanded 5,500+ sq m in Cebu for business
continuity reasons in case Metro Manila sites go
offline due to natural disaster
next wave cities migration pattern
5th Avenue, Bonifacio Global City
Foreseen to become the next Ayala Avenue
Financial center of BGC
Pipeline of Premium and Grade A office and
residential properties
Major leisure and entertainment establishments
located along 5th Avenue
Notable properties:
Bonifacio High Street
Fort Strip
PSE Tower
Shangri-La at the Fort
ArthaLand Tower
upcoming office developments in BGC
Net Park 5th Avenue Grade A+
ArthaLand Tower 5th Avenue Premium
PSE Tower 5th Avenue Premium
World Plaza 5th Avenue Grade A+
The Finance Centre 9th Avenue Grade A+
Asian Century Center 4th Avenue Grade A
2015 2016 2017
Midyear Market Update Media Round Table | August 28, 2014
