|Workers shovel sand at a building construction in Mandaluyong City, Metro Manila November 28, 2012. Photo by Cheryl Ravelo, Reuters
MANILA, Philippines - Manila's appeal as an real estate investment and development destination has grown significantly this year, according to a report released by the Urban Land Institute and PwC.
Based on the Emerging Trends in Real Estate 2013 report, the Philippine capital ranked 12th out of 22 cities in the list of top investment cities.
Jakarta topped the list as the number one city in investment and development, followed by Shanghai, Singapore, Sydney and Kuala Lumpur.
Manila's 12th ranking, however, was higher than Tokyo (13), Seoul (14), Auckland (17) and Osaka (22).
Manila's ascent in the rankings is even more significant, as the city ranked near bottom of the rankings in previous years. It ranked 18th last year.
"Markets in Manila have performed well in the past couple of years as a result of the growing economy, a transparent and business-friendly government, and the country’s ongoing success—an 'eye-opener'—in attracting foreign corporate clients to its business process outsourcing (BPO) facilities. Bureaucracy has declined and transparency has improved considerably over the past few years," the ULI report stated.
In terms of city development, Manila ranked 9th, also ahead of Hong Kong (10), Sydney (13), Melbourne (14), Seoul (17) and Tokyo (18).
ULI said Manila's growing appeal is part of a greater trend that shows investors turning to secondary markets and emerging cities in search of returns.
PH property boom
The Philippine economy's better-than-expected performance has continued to fuel the property boom.
"Manila is in the midst of a property boom. It’s the best that we’ve seen in decades—clearly a sign of the increasing confidence in our economy,"said Judith Lopez, Chairman and Senior Partner at Isla Lipana & Co.
"The government’s transparency has significantly improved, making the country more attractive to foreign investors. The positive outlook in Manila’s real estate sector is mirrored by the great opportunities presented by the BPO and gaming sectors over the next two years," she added.
As proof of the boom, Jones Lang LaSalle reported higher leasing activity in Manila.
"As of October 2012, the firm has tracked 413,000 sqm. of office leases, a 15% rise from 2011 so far. With several more leases expected to close before the year ends, leasing activity has exceeded our forecast. Further, we are seeing confident investment sentiment not just in office development but also in the acquisition of property for future development, whether it be for mixed use, commercial, residential, hospitality, retail or industrial," said Jones Lang LaSalle country head David Leechiu.
Foreign ownership still an issue
However, the ULI report said the Philippines' policy barring foreign ownership of land is a major concern for foreign investors.
"However, though investment prospects appear bright in the Philippines across all sectors, government regulations that bar foreigners from holding majority landownership continue to deter international investment. What is more, local developers have little incentive to partner with foreigners, given the availability of ample liquidity from domestic sources," the report said.
Foreign investors are likely to be limited to the gaming and BPO sectors. "Admittedly, both present
large opportunities, with the latter currently accounting for some 70 percent of new office take-up in Manila," the report said.
The ULI report covered 22 cities in Asia Pacific, citing opinions of investors, developers, property company representatives, lenders, brokers and consultants. ULI is a global nonprofit education and research institute.