Regardless of the uncertainties in the global economy, particularly in China, the remainder of this year seems promising for the Philippines according to the latest property market research from real estate agency Savills.
The firm said that it expects that the country’s GDP growth will be within the same range as 2015 at around 6.0 percent, which will in turn, sustain the strong activity in the real estate sector as well.
As for the capital markets, the previous year ended on a high note. The last quarter of 2015 saw a wide range of capital market transactions that illustrated the current market trends rather well. Among these, the most notable activity was the asset consolidation of Starmalls under Vista Land by the Villar family. The estimated PHP 33.6 billion deal included 12 properties, mainly malls, adding the retail component to Vista Land’s portfolio and transforming it into a fully integrated property development company and one of the largest property developers in the country.
This deal also highlighted the ongoing trend of local developers pushing their business models to focus more on recurring income from residential sales, as the residential market has started to show some signs of saturation.
Another notable deal which pushed through was the US$ 150 million debt facility to finance five office buildings in Clark Freeport Area, highlighting the increased flow of foreign capital into the Philippines property markets.
Dubbed the new Bonifacio Global City, this transaction will definitely add some momentum to the transformation of the Clark area, Savills noted. After ten years of speculation, Clark seems to be starting to capitalise on the momentum. Currently the area already hosts some multinational occupiers engaged in manufacturing and Business Process Outsourcing.
Aside from the Clark deal, the quarter witnessed several other deals involving foreign investors. Hong Kong Land announced two joint-venture development deals; one with D.M. Wenceslao group in Aseana City and another in Cebu with Taft Properties. In the hotel sector, as part of an internal consolidation, a partial interest of New World Makati was transferred to New World Development from the parent company. Meanwhile, Ascott REIT exited from the 71-room Salcedo Residences for PHP 240 million.
Looking beyond 2016, much remains to be decided in the presidential elections in May. From a real estate point of view, the most interesting topic of discussion has been whether there will be amendments to the foreign ownership restrictions to capitalise on the high foreign interest in the country. Once completed, these amendments could translate to increased volumes and ease the deal execution by foreigners, supporting the growth trajectory of the country.
