MANILA, Philippines - The Philippine property market's strong performance will continue to be fueled by demand from the business process outsourcing (BPO) industry and gaming sector, an official of property consultant CBRE Philippines said on Wednesday.
"The Philippine real estate sector will have bright prospects in 2013. We see sustained growth in the BPO, office, residential, gaming, and leisure sectors... We see continued growth and optimism in real estate, a barometer of the economy in general," CBRE Philippines chairman Rick Santos said in a press conference in Makati City.
Santos is optimistic the Philippines will finally get an upgrade to investment rating in 2013, which will further boost the economy and the property market.
The fiscal dilemma in the US and euro zone crisis is not seen to have much of an impact on the Philippines. Santos noted this will only push more US and European companies to outsource jobs to the Philippines.
BPO companies will be fueling the demand for office space in the country, said Joey Radovan, CBRE Global Corporate Services vice chairman.
"Eighty to 90% of transactions in 2012 were driven by BPOs. In 2013, that trend will continue. BPOs in the Philippines and new companies looking to outsource in the Philippines will drive that growth," Radovan said.
Makati remains the most cost-effective outsourcing destination. Makati's rental rate of $22/sq ft a year is the lowest among 18 other Asian central business districts including Bangalore ($33), New Delhi-CBD ($92) and Mumbai-BKC $117.
New BPO office spaces are expected to become available in the next three years, mostly in Fort Bonifacio and Quezon City.
"Quezon City has the biggest population and compared to Makati and Bonifacio is still a low-cost BPO destination," Radovan said.
Despite BPO companies' profits being affected by the strong Philippine peso, Radovan said multinational companies are looking at the Philippines as an outsourcing destination mainly because of the excellent pool and low cost of skilled labor.
PH to challenge Macau, Vegas?
Santos expressed confidence the Philippines will be able to challenge Macau and Las Vegas in gaming revenues in just five years.
Philippine gaming revenues are estimated to reach $10 billion by 2016 once the Pagcor Entertainment City is completed. In 2011, gaming revenues stood at $1.3 billion.
Several high-profile casino resort projects are expected to open in Entertainment City in the next few years. This includes Enrique Razon-led Solaire Resort and Casino; Belle Grande Manila Bay of Belle Resources, Resorts World Manila Bay; and Japanese tycoon Kazuo Okada's Universal Manila Bay Resort.
No glut in residential sector
Victor Asuncion, CBRE Philippines executive director, said there are more Filipinos who are becoming homeowners because of the low interest rates and affordable financing schemes.
He addressed concerns about a glut in the residential market.
"We don't have oversupply. It's a matter of tapping the market, given it's a growing market... I don't see any oversupply or glut because a glut means nobody is buying," he said.
In fact, there is still more room for property companies to grow. CBRE Philippines estimates approximately 300,000 households in Metro Manila that can afford a condominium with a contract price of at least P1 million.
"In 2012, the take-up rate is 28,000 and the increase in the household base that can afford it is about 60,000. The market base is larger than the takeup. This means there is opportunity for developers to entice these households to buy condos if they are in urban centers, if not, house-and-lot in suburbs," Asuncion said.
CBRE noted strong demand for condominium units priced above P100,000 per square meter, mainly because property companies are keeping a tight hold on supply and demand for these high-end projects.
However, Asuncion said condominium projects are location-sensitive, so it should be located near MRT stations or in township projects.
"The challenge is having the (project in a) right location at the right price point," he said.