‘State of real estate’ 2020

Outlook remains cautiously bullish, prospects continue to be bright, while most economic indicators point to a sustained, robust growth for the local real estate industry.

Add to the mix a strategic gameplan and you may have stakeholders and investors who are not only well equipped to anticipate and curb possible headwinds, but are also able to maximize the potentially lucrative opportunities presented by this highly dynamic sector.

Thus was the overriding theme of the discussions in the first Inquirer Property Forum entitled, “State of Real Estate: A Clear Vision for 2020,” which was held on Wednesday at the Manila Polo Club, Makati City.

Renowned industry experts Prof. Enrique Soriano III, executive director of Wong+ Bernstein Advisory Group, and Richard Raymundo, managing director of Colliers Interna-tional Philippines, were all forthright in forecasting the tailwinds, as well as in presenting the challenges that could potentially dampen growth amid an ever evolving real estate landscape.

Tailwinds, headwinds

Raymundo broke down his discussion into three to cover offices, residential and retail.

He reported that opportunities abound for the office property market given the growing presence of Philippine offshore gaming operators (Pogos), which are driving both demand and prices. For 2020, Colliers sees at least a third of all office space transactions coming from Pogos, which should contribute to acceleration of lease rates in key hubs (Bay Area, Ortigas Center, and Quezon City).

But what could potentially cloud the growth in this segment is the moratorium on Pogos in some cities and on the issuance of Philippine Economic Zone Authority (Peza) accreditations in Metro Manila, which was supposedly part of the government’s decentralization plan to push stronger economic activity in the suburban areas.

On the residential space, Metro Manila continues to have enough room for growth as prices here remain “affordable” relative to other key cities.

Raymundo cited as an example Manila’s most expensive residential property today: The Estate Makati, which currently offers units priced at a whopping P550,000 per sqm. Residential prices in Bangkok, he said, are twice that of The Estate; Singapore’s three times higher; New York’s about 10 times; London’s 15 times; while the country’s neighbor Hong Kong is 20 times higher than The Estate’s average price level.

He further pointed out an emerging growth driver in this segment: the halfway houses and co-living spaces, which have become a more attractive option for those who normally have to endure four to six hours of horrendous traffic every day to go to work in central business districts and back home.

What may dampen growth, however, would be the moratorium on Pogos as their employees account for a chunk of condominium take up in Metro Manila; possible delays in the government’s infrastructure initiative; and the high land values which may hamper landbanking activities of developers.

Finally, the retail segment offers it own share of prospects and challenges for developers. Among the concerns cited was the possible demise of the department store once e-commerce, online shopping and digital experience take precedence eventually. While this may however be far into the future, it’s best for developers to find ways to integrate such features in their respective operations.

Gameplan

While Raymundo focused on data and hard facts, Soriano meanwhile delved on the need to have clear-cut strategies to ensure that one is well equipped to thrive in a changing landscape.

According to Soriano, fast growing cities such as Metro Manila, will present a wider range of risk and return opportunities in real estate. But imperative to maximizing these opportunities would be to have a smart, ingenious gameplan that would harness the benefits of technology, incorporate innovation and sustainability in the company’s core operations, and would collaborate with the local and national governments.

As Soriano would often reiterate in his articles for Inquirer, a gameplan is a company’s best friend: the industry is fraught with uncertainties and competition is becoming intense.

It would also be imperative to take note of demographic shifts as well as changing preferences of today’s market, such as the growing need for pockets of nature and open spaces, energy efficient homes, sustainable communities and smart cities.

“Real estate players will need a higher degree of specialist expertise in their chosen areas and locations of activity, plus greater foresight to identify investment trends at an early stage within each market,” Soriano said in the forum.

(Source:  Phil. Daily Inquirer, 25 January 2020, by:  Amy R. Remo)