Philippines Real Estate Market | Real Estate Industry Trends|Infrastructure Spending Philippines

1
Philippines Real Estate Market Report 2020
Ken Research
2

• How the Philipppines Real Estate Market
  Performing?
• The Philippines real estate market exhibited a
  significant growth during 2010-2015. The market
  grew at a CAGR of , reaching USD billion in
  2015 from USD billion in 2010. Growing foreign
  investments accompanied by development in the
  infrastructure has strengthened the growth of the
  Philippines real estate market. Moreover, factors
  such as rapid urbanization driven by growing
  middle class, surging BPO industry, rising number
  of international tourists, OFW remittances has
  further translated the demand for real estate
  sector in the Philippines. The market is further
  expected to witness an impressive growth during
  the forecast period 2016-2020. The market is
  witnessed to grow at a CAGR of to reach USD
  billion by 2020. The major segments in the
  real estate sector include revenues from
  residential units leasing and sale, office
  spaces, retail leasing and revenues from hotel
  sector.

3

• The Philippines real estate market in Manila is
  expected to witness a rapid growth during the
  forecast period 2016-2020. The market is expected
  to witness a CAGR of during the forecast
  period owing to a tremendous growth an expansion
  in the retail sector followed by increasing
  number of residential units and increasing office
  supply. Other major markets contributing to the
  growth in the real estate include Cebu and Davao.
  The Philippines real estate sector witnessed a
  positive outlook during 2014-2015. Growing demand
  from the business process outsourcing (BPO)
  industry, rising rents, a construction boom and a
  substantial increase in foreign remittances
  played a vital role in the Philippines real
  estate sector expansion. Demand for residential
  units remained high. However, high liquidity in
  the system kept the capital values outpacing the
  rental growth. The commercial sector witnessed a
  shortage of supply which led to an increase in
  the rentals during 2015

4

• How has the Real Estae Market in Metro Manila
  Performed?
• Metro Manila dominates the Philippines real
  estate market. The market for real estate in
  Metro Manila exhibited revenue of USD billion in
  2015 as compared to USD billion in 2010. The
  market witnessed a CAGR of during 2010-2015.
  The significant growth in the province is
  attributed to a number of factors including high
  take-ups in the office sector, continuously
  expanding retail sector, followed by major
  expansion in the BPO industry. The rapidly
  growing employment and income boom generated by
  these BPO companies has fueled the demand for
  more commercial spaces in Manila. Average rents
  of prime and Grade A office developments in Metro
  Manila maintained an upward trend in 2015 owing
  to robust office demand and healthy leasing
  activities during the period. The commercial real
  estate sector which includes the offices posted
  revenues accounting to USD million in 2015. The
  office sector posted a CAGR of during
  2010-2015. The office sector has witnessed a high
  demand in the leasing segment owing to affordable
  rentals in Manila.

5

• The retail sector contributed to the highest
  market share in the Manila real estate market
  accounting for share in 2015. The positive
  economic outlook, leading to the rise in private
  domestic spending, has created a favorable
  condition for the retail sector. Strong
  fundamental such as constant OFW remittances, a
  growing middle-class, and the good employment
  situation translate to increased purchasing power
  during 2010-2015. The retail sector in Manila is
  entirely dominated by the leasing sector. The
  demand for residential apartments is backed by
  increasing popularity of condominium, rising BPO
  sector which is leading to an increase in the
  number of employees, thereby leading to a rise in
  demand for residential space in Manila. A rise in
  the total number of licenses for economic housing
  resulted also led to a growth in the residential
  real estate market. The residential sector
  contributed a share of in the Manila real
  estate market in 2015.

6

• The hotel market in Metro Manila exhibited a
  compounded annual growth of during 2010- 2015
  on the back of rising tourism in the country. The
  majority of existing hotels and serviced
  apartments are located within the business
  districts, thereby increasing the demand for
  hotels in the regional International tourists in
  the country reached million in 2015.
• How Have Different Sectors Performed In Manila?
• The major chunk of share in the real estate
  revenues in Philippines was held by the retail
  real estate contributing in 2015 owing to
  continuous increase in the retail stock supply
  with an increasing demand driven by expansion of
  new and existing international brands in the
  major shopping malls within Metro Manila.
  Moreover, the positive growth of remittances and
  sustained high level of spending is fueling the
  retail property market in the region.

7

• The demand for residential apartments on the
  other hand is backed by increasing popularity of
  condominium, rising BPO sector which is leading
  to an increase in the number of employees,
  thereby leading to a rise in demand for
  residential space in Manila. The region witnessed
  a tremendous growth in the investment by real
  estate companies such as Ayala Land, SM Prime,
  Century Properties, Robinson land etc., who are
  increasingly focusing on new residential
  developments. In case of commercial sector, the
  BPO sector remained the primary driver of the
  office property market in 2015. The hotel market
  in Metro Manila exhibited a robust growth in 2015
  on the back of rising tourism in the country. The
  majority of existing hotels and serviced
  apartments are located within the business
  districts, thereby increasing the demand for
  hotels in the regional International tourists in
  the country reached 5.4 million in 2015.

8

• What Has Been The Contribution Of Davao In The
  Philippines Real Estate MARKET?
• The real estate market of Davao flourished with
  growing population, increasing construction
  activities, lower rentals as compared to Metro
  Manila, improvement in infrastructure and
  migration of people to Davao owing to rapidly
  growing employment opportunities in the BPO
  sector. Though Davao, contributes only a fraction
  of share in the overall Philippines real estate
  market, the province is certainly becoming a
  choice of property purchase in Philippines. The
  real estate market in Davao grew at a CAGR of
  during 2010-2015, posting revenue of USD
  million in 2015.The demand for residential units
  has remained strong in Davao due to fast take-up
  in the low-cost segment. The sector contributed
  revenue accounting for USD million in 2015, a
  increase from 2014. The residential real
  estate segment in Davao is majorly dominated by
  the real estate sales market due to lesser
  capital values of condo units in the region. The
  rapid influx of people into Davao City has
  transformed it into the countrys largest
  urbanized area in terms of population, which in
  turn has pushed the demand for retail space in
  the city. The retail segment posted a CAGR of
  during 2010-2015 and is expected to showcase a
  growth of during 2016-2020.

9

• What Is The Market Scenario Of Real Estate In
  Cebu?
• Metro Cebu is the second largest province in the
  Philippines. The province contributed a major
  chunk of revenue to the real estate industry in
  the Philippines during 2015. Market witnessed a
  rapid growth, posting revenues amounting to USD
  billion in 2015. The market grew at a CAGR of
  during 2010-2015, owing to surge in overseas
  remittances from Filipinos abroad, increasing
  demand for middle range and economic housing
  projects by OFWs, huge investments by major real
  estate developers in Philippines accompanied by
  low interest rates has led to an increase in the
  construction and demand for residential units.
  The residential real estate sector grew at a CAGR
  of during 2010-2015. The market for
  residential sector in Cebu is dominated by the
  residential sales sector owing to high demand for
  small and mid size condos, moreover, OFW are
  continuously investing money in the purchase of
  residential apartments for investment purpose.
  The continued expansion of the call center
  industry and more professionals operating firms
  have maintained a robust growth in the office
  property market. The demand for office space was
  also supported by the boom in BPO firms due to
  cost effectiveness and quality labor pool. The
  sector grew at a CAGR of during 2010-2015.

10

• The retail sector also contributed largely to the
  real estate market due to vibrant spending
  activities and high foot-traffic across
  districts, leading to an average mall occupancy
  rate of . The compounded annual growth rate in
  the sector accounted for . The hotel sector in
  Metro Cebu is growing on the heels of growing
  number of tourist arrivals in the region. The
  real-estate revenues in the hotel sector reached
  USD million in 2015. Tourist visitor arrivals
  grew at double-digit rates, creating a surge in
  demand for hotels and resorts. The real estate
  developers are continuously investing in the
  expansion of existing and construction of new
  hotels in the province. The real estate market in
  Cebu is expected to exhibit a positive trend
  owing to the availability of cheap labor along
  moderate rise property rentals which in turn is
  expected to bolster investments in the province.
  Moreover, a continuous increase in the office
  building projects along with residential projects
  is expected to brighten the future of the market.
  The Cebu real estate market is expected to
  witness a tremendous growth in the CAGR
  accounting for during 2016-2020.

11

• What have been the Trends for Philippines Real
  Estae Market?
• The Philippines real estate market is driven by
  growing OFW remittances which help in funding the
  real estate sector. The Philippines was the
  worlds third largest recipient of foreign
  remittances in 2014. It is estimated that
  remittances from overseas Filipinos account for a
  tenth of the Philippines GDP. According the bank
  of Philippines, personal remittances from
  overseas Filipino workers (OFW) reached USD
  billion in 2015, which is higher than for the
  same period in 2014. Philippines has witnessed a
  gradual shift in the marketing expenditure of the
  real estate advertisers from offline to online
  advertising. The real estate advertisers have now
  started spending more on digital advertising
  owing to growing popularity of online real estate
  websites across globe. The Philippines rapidly
  rising Internet penetration rate, a technology
  savvy population and an optimistic real estate
  market is driving the market for online real
  estate in the country.

12

• IT-BPO industry in Philippines will continue to
  drive the growth of Real estate market in the
  country. The business process outsourcing sector
  has been a significant contributor to the growth
  of the office market. The IT-BPO sector
  registered an revenue increase in 2014. There
  is a very strong demand for commercial spaces
  which is been utilized by BPO centers and
  offices. On the other hand, the demand for
  residential units will continue to be strong due
  as the BPO sector has led to the arrival of
  expatiates with the expansion of multinational
  companies. This market adds to the demand for
  more residential units With the growth in
  tourism, more hotels are are expected to be
  introduced in 2015. The increasing arrival of
  domestic visitors and international travelers has
  raised the demand for hotels, accommodations, and
  other forms of tourist facilities in the
  Philippines, thereby leading a growth in the
  Philippines hotel sector.

13

• What Are The Issues Challlenges Faced By
  Philippines Real Estate Market
• With an exceptional growth of the BPO sector in
  Philippines, the leasing market for residential
  and office space has remained active. Many
  residential Office real estate projects are
  expected to be completed during the forecast
  period. This in turn has led to a shortage in
  supply of office spaces and residential units.
  The shortage, however, has led to the increase of
  rental rates. Current trends also saw the
  development of several serviced offices, which
  cater to the booming outsourcing industry and
  needs for high-quality office spaces at lower
  average rates. Despite the strong demand,
  financing remains a challenge for prospective
  condominium owners. It has been witnessed that
  the majority of the growing middle class still
  doesn't qualify for bank loans. Major real estate
  developers are constantly trying to work around
  this by taking on the bank loans and offering
  more affordable payment schemes however, the
  Central Bank's strict policy is hampering the
  lending, thereby posing a challenge for the
  growth in real estate market.

14

• The increased competition in the industry has
  also posed a challenge for the real estate
  developers. The increased competition is more
  apparent in the residential and budget hotel
  sector across the country, which have lower
  barriers to entry than the office, retail, and
  industrial sector.
• What Is The Status Of Brokerage Market In
  Philippines?
• The brokerage market in the Philippines is
  segmented on the basis of brokerage from the sale
  of property and from leasing. There are around
  real estate brokers in Philippines having an
  average real estate transaction size of
  properties annually in the leasing segment and
  around 20 sale transactions. The leading real
  estate brokerage companies in Philippines include
  Phil. Property expert, property 24, Cebu Realty
  Brokerage etc.The brokerage rates for sale of
  property in Philippines have aligned between 3-5
  of the cost of property while for renting it has
  stayed equal to one month of rent of the property
  rented.

15

• Source https//www.kenresearch.com/manufacturing-
  and-construction/real-estate/philippines-real-esta
  te-market-research-report/29319-97.html
•  Contact Ken ResearchAnkur
  Gupta, Head Marketing CommunicationsAnkur_at_kenre
  search.com91-9015378249

16
Thank you