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5 factors that shaped Philippine real estate this year

In a few days, 2018 will say goodbye and 2019 will come in. Looking back, how has the Philippine real estate sector been?

A report posted on ReTalk Asia outlines the following, citing Rick Santos, chairman and CEO of the real estate service firm, Santos Knight Frank, and his team.

1. Investments from East Asia
Latest data from the BSP revealed that Foreign Direct Investments grew by 31% during the first 8 months of the year, spurring activities in real estate, manufacturing and other sectors. Equity capital infusions from Japan, Hong Kong and China were among the drivers of FDI during the year, taking advantage of the Philippines’ strong macroeconomic fundamentals and the government’s push on infrastructure.

2. BPO expansion in the regions
In a survey conducted by Santos Knight Frank and the I.T. & Business Process Association of the Philippines (IBPAP) in October, 14% of respondents said they plan to expand in Clark and another 14% in Iloilo, while others mentioned Davao and Cebu.

The survey further revealed that infrastructure remains the primary factor affecting choice of location. Other considerations include population size, tax perks and holidays, number and reputation of educational institutions and good political climate.

3. Rise of collaboration
At least two-thirds of global corporates plan to increase their utilization of co-working spaces. Meanwhile, 80% expect to grow the amount of collaborative space over the next three years, according to (Y)OUR SPACE, a new report by Knight Frank on workspace occupier solutions.

Francis Goño, Director of Occupier Services & Commercial Agency at Santos Knight Frank says, “Over the last couple of years, Manila has seen a tremendous growth in the co-working space. Now more than 110 co-working and shared office locations are operational, driven primarily by the need for flexibility.”

4. More room for growth in tourism
While foreign tourist arrivals have grown by 9.5% to 5.3 million by the third quarter, domestic travel – around 60 million trips annually – is also driving greater investment into the tourism and hotel industry. Santos Knight Frank estimates that Manila’s 20,800 hotel rooms will expand by an additional 33% in the next five years.

Kash Salvador, Associate Director for Investment & Capital Markets at Santos Knight Frank says, “The rehabilitation of Boracay has put greater emphasis on sustainable tourism and promoted other emerging alternative locations, such as Palawan, Siargao, and Bohol. We expect more international hotel brands to operate around the country, especially in key cities such as Cebu, Bacolod, and Davao. We see an increase in connectivity and infrastructure in the country which will drive the tourism industry.”

5. Retail driving logistics
The team quoted Calvin Javiniar, Senior Director for Investment & Capital Markets at Santos Knight Frank as saying: “Warehousing and storage in city centers is becoming more important nowadays. Consumer demands have been increasing and companies need to address delivery schedules against increasing traffic congestion. In addition, we’re also seeing the popularity of ‘Last-mile logistics’, increasing the number of smaller warehouses within cities to connect larger distribution centers with customers in urban areas.”

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