MANILA – The year of the Earth pig will be a “very strong year” for the Philippine property market, driven by Chinese investments and the overall growth of all major sectors, property consultant Santos Knight Frank said Tuesday.
Chinese investments, which rose to over $190 million from January to October 2018 compared to just $13 million in 2017, is likely to continue this year, said Santos Knight Frank CEO Rick Santos.
Prices of residential properties in the Manila Bay area "astronomically" grew 65 percent last year compared to 15 percent in some business districts, due to the demand generated by Chinese nationals, said senior director for Research and Consultancy Jan Custodio.
Aside from China, the Philippines is also a popular investment destination for Singapore, Hong Kong and Japan, the firm said.
“I think it’s encouraging to have mainland Chinese investors in here. It’s been positive for the office leasing market, for developers and it’s been positive for residential developments,” Santos told ABS-CBN News.
Asked whether there is any downside to the massive Chinese investments, Santos said the Philippines “has done a good job in putting safety measures up” and banks have been “discerning” when it comes to loan exposures and loan valuations.
According to Philippine laws, foreign ownership is limited to 40 percent. But the challenge for developers is selling the remaining 60 percent to Filipinos for the same price, said associate director for Investments and Capital markets Kash Salvador.
“I think that’s the question to ask, if given that some people are willing to pay for this price. Are you able to sell the remaining 60 percent for the same price?” Salvador said.
Meanwhile the retail sector is expected to remain “very healthy” this year despite the popularity of e-commerce as consumers still prefer to go the malls, said senior director for Occupier Services and Commercial Agency Morgan Mcgilvray.
He said mall developers are still expanding and innovating, to offer more food and beverage and experience centers instead of retail spaces. Robinsons Galleria underwent a revamp while Shangri La in Mandaluyong opened a red carpet movie theater.
“People still want to go to shopping malls. There is a lot of potential… The demand for real estate retail space is still strong especially for the food and beverage,” Salvador said.
Santos said new sectors such as co-working, and the dormitory type co-living will continue to grow, while the returning industrial leasing will be "huge" this year as logistics companies expand.
Aside from DoubleDragon, other big players are also looking at venturing into the industrial logistics sector, Santos said.
“It is an exciting time for the Philippine property market both for developers and consumers,” he said.