In a media briefing, Santos Knight Frank, Inc. forecast a continued expansion in the real estate sector on the back of a growing business process outsourcing (BPO) industry, strong overseas remittances, infrastructure development, sustain investment inflows and favorable demographics.
“The economic fundamentals that have positioned the country on a prime spot in global investments remain extremely strong,” Rick M. Santos, chairman and chief executive officer of Santos Knight Frank, said in the briefing in Makati City on Wednesday.
The residential and industrial segments of the property market, in particular, will supposedly receive a boost from the availability of more funding sources, as the Philippines strengthens relations with other countries.
“As the Philippines forges new international alliances and attracts a wide net of investors, we see investors from China. Also, we’re in talks with other European countries and Russian investors are coming in,” Mr. Santos said.
The new alliances present news sources of funding, in addition to the United States and other traditional investors, especially for the residential and industrial segments of the property market, Mr. Santos noted.
This year, the residential segment is expected to grow further on sustained investor interest, growing investments from overseas Filipino workers (OFWs), robust BPO sector and inflow of millennial work force.
The industrial segment, meanwhile, will benefit from the steady increase in consumer spending that actually prompted manufacturing firms to expand their operations and storage facilities last year.
“In the long run, there will be sustained consumer confidence backed by strong consumption pattern and increased disposable income,” read a report distributed by Santos Knight Frank to reporters on Wednesday.
“The manufacturing sector will remain one of the significant drivers of GDP (gross domestic product) uptrend. In relation to this, it is expected that demand for manufacturing, warehouses and industrial lots will be strong, with economic zones a full occupancy.”
Companies have been searching for warehouses and manufacturing sites in known industrial locations, including Central and North Luzon, Santos Knight Frank noted.
Meanwhile, the office segment will continue to propel the real estate market forward, as the strengthening of the dollar against the peso makes doing business in the Philippines even less costly, according to the property consultancy.
“We’re very optimistic about the BPOs especially with the dollar strengthening [against] the peso. That’s also fueled demand in the BPO sector,” Mr. Santos said.
In 2016, overall vacancy in the National Capital Region further narrowed to 1.36%, as the completion of office buildings faced delays brought upon by the lack of skilled labor in the construction side.
Accordingly, more than 1.6 million square meters (sq.m.) of office supply, in terms of gross leasable area, will become available in the market within the year, according to Santos Knight Frank.
Mr. Santos has engaged in property consultancy in the Philippines for more than two decades now. It had worked with Los Angeles-based CBRE Group, Inc. before partnering with London-based Knight Frank LLP this year.