Property transaction volume to grow in 2016

Real estate transaction volume in the Philippines is expected to improve over the rest of 2016 after a sluggish first quarter, driven by developers expanding their portfolios, according to a report by Savills.
The London-based real estate services firm noted that the Philippine real estate sector had a “quiet” first three months of the year in terms of investment volumes, despite the strong volume of transactions the industry saw at the end of 2015.
“With only a few direct investment deals recorded, the transaction volume remained low, possibly reflecting trends seen in the global economy, which started the year facing rather uncertain conditions, particularly in the capital markets,” the report said.
In 2015, volume of property-related transactions made increased by more than 20 percent from the previous year to P79.9 billion, according to KMC Mag Group. This was driven by the growing occupier demand from the offshoring and outsourcing (O&O) sector.
Savills noted that the Clark Freeport Area remained the focal point of investment demand during the first quarter of 2015, as it scored two investment deals.
Among the deals are the 202-hectare Mimosa Leisure Estate that was won by Filinvest Development Corp and the acquisition of the Hotel Stotsenberg and Casablanca Casino by Frontier Capital Group for P1.2 billion.
The report identified Sta. Lucia Land as the most active player during the quarter, as it acquired 13 properties amounting to 97 hectares across the country during the first three months of the year.
Meanwhile, the period also saw two joint venture developments form. Of these are the JV between Ayala Land Inc., and the LT Group to develop a 35-hectare township property, and the JV between boutique developer Arthaland and overseas investor Arch Capital for the development of a 8,400 square meter property in Cebu.
“Despite the sluggish start, 2016’s investment market is expected to pick up in the coming months,” Savills said. “We expect the transaction activity to reach similar levels to 2015, supported by positive economic conditions and the aggressive expansion plans of local developers.”
This strong sentiment was also expressed by KMC Mag Group, as it noted that capital expenditures by major developers for this year are estimated at P397 billion.
“While a majority of this capital is covering ongoing projects and new launches, investment sales have certainly picked up as well in recent years as evidenced by the increasing transaction volumes,” KMC Mag Group said.