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Govt. economic plans help boost PH realty sector

MAKATI: Thanks to the positive impact of the government’s economic growth plans, the Philippine real estate sector will continue to witness the boom for next six years, global real estate service firm KMC Savills has predicted.

“We see a very positive outlook for the sector,” Manila Bulletin quoted co-founder Michael McCullough as saying.

The strong office space segment in Metro Manila leads the local real estate industry’s growth. The industrial sector, long a laggard, is likewise beginning to pick up as foreign manufacturing companies show eagerness in opening up facilities in and outside of Manila, he reportedly said.

The administration’s economic agenda prioritizing countryside development, infrastructure and agriculture growth boosts the Philippines’ position as one of the top three destinations in Southeast Asia for Foreign Direct Investments (FDIs) by 2022, the report said.
Among the new administration’s plans is to lift foreign ownership rules from 40 to 70 percent, at the same time, lifting limits on land lease from 25 to 40 years.

With the ASEAN integration offering the country participation in global production networks, relaxation of foreign ownership restrictions will appeal to investors who look at the global market for goods and services. This will further open the country up to competition, KMC Savills Head of Research Antton Nordberg reportedly said.

“Relaxing restrictions will attract investors in key industries, where they are presently barred from entering and providing competition,” he reportedly noted. Already, “The world is taking notice of the Philippines as a promising investment destination. Raising the cap on foreign ownership will complement this and open the economy to strategic industries.”

Beside making current investors keen on expanding their foothold in the country, it will also bring in more foreign investors in public utilities and other infrastructure that need big capital investments, said the news portal.

The government’s increased infrastructure spending and countryside development likewise opens more opportunities for Philippine real estate, as infrastructure eases the costs of logistics for industrial firms.

The industrial and manufacturing sectors have been dormant for a long time, but it looks like it could finally be on the rise, McCullough suggested.

“About 60 percent of FDI applications over the past five years have been directed in the manufacturing sector and we believe that the industrial sector will be the next boom,” he was quoted as saying in the report. “We’re optimistic that local consumption will offset the declining global demand, leading to an industrial real estate growth of 6-7 percent this year and exponentially after that.”

Definitely, the real estate industry is in a sweet spot, Nordberg added. “The Philippines has a strategic location, a large and fast-growing market and knowledge of English. Growth rates in the industrial segment could even double in the next years. Office spaces will also continue to be on the rise, as we have a 40-million strong workforce and cheap labor.”

According to the Philippine Statistics Authority, 442 approved building permits were granted in the first half of 2016 or 11.3 percent of non-residential buildings. Commercial buildings accounted for 59.5 percent, with a total of 2,326 permits issued for the same period, reported Manila Bulletin.

KMC Savills reported that Metro Manila had an impressive real estate performance during the first half of 2016, showing a positive net absorption of 291,000 sq. m during the first six months of 2016.

The quarter also registered tightening vacancy rates, reaching 2.9 percent from 3.7 percent last quarter. This may increase in the short-term, with the completion of 259,000 sq. m of leasable space by the end of the year, the report said.

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