Stellar would probably best describe the strong, sustained growth of the Philippine real estate industry this year.
A look at the performance of some of the biggest property developers alone would clearly demonstrate the impressive gains made by the industry—many of them well on track with their medium term expansion plans, launching new projects, introducing innovative concepts, and aggressively ramping up their respective already massive capital outlays over the next several years.
No doubt about it: property developers are highly bullish of their prospects, evident in the continued construction boom not only within Metro Manila and key cities like Cebu and Davao, but also across regions and provinces that were once home to sleepy, rural towns.
Prof. Enrique Soriano, W+B Advisory executive director and Ateneo program director for real estate, even called the performance of the local property sector this year as “dramatic.”
“If you do an averaging of the sector’s performance the past five years, it clearly registered the highest in nearly four decades. It was obvious that the growth of the property sector moved hand in hand with the average growth of our GDP (gross domestic product) from 2010 to 2014,” Soriano said in an interview with Inquirer Property.
“Real GDP growth using a five-year moving average was as its highest. The last registered five-year real GDP growth was from 1973 to 1977. The growth has been supported by sound and stable macroeconomic fundamentals and the presidential election this year extended the momentum,” he added.
According to Soriano, the biggest contributors of the sustained property upswing include the growing remittances from overseas Filipino workers; the perennially strong earnings from the business process outsourcing industry; and rising domestic tourism receipts.
Other factors that have helped boost the real estate industry included sustained private sector confidence; stable interest rates; and increasing consumer demand, he added.
Within the industry, several segments were able to benefit significantly from this boom including the office, residential, retail, and hospitality sectors.
According to Soriano, the Philippine real estate is on an extended property curve and the softening of the market is inevitable.
Sustaining this growth momentum, however, must see an environment with a low level of interest rates, particularly short-term interest rates, that make homes more affordable; an upturn in general economic activity and prosperity that would put more disposable income in consumers’ pockets and would encourage home ownership; and an increase in the demographic segment of the population entering the housing market (OFW market).
Also crucial to the continued growth of the Philippine real estate market would be easy access to credit that could bring more qualified buyers to the market; as well as stricter lending regulations and protocols for development.
New investors, expansions
Next year, the Philippine real estate market may expect the arrival of new investors that may further help in transforming the landscape, as well as innovative concepts that could raise the bar anew among local property developers.
For one, the current administration’s pivot to China may prompt many Chinese investors to take advantage of a favorable market on the back of a stronger support from the government.
“The Chinese are coming. Expect a new set of investors either as developers or buyers coming from China,” Soriano said.
According to Soriano, he also expects that more property developers will continue expanding into the provinces; more compelling and innovative projects are set to excite the market, who is tired of “me too” projects; more green projects will be introduced; and more joint ventures with the industry’s counterparts in the Asean region are seen to happen.
Meanwhile, the developers themselves are highly optimistic of what lies ahead, as they gear to tap the highly lucrative opportunities offered by a robust economy, an expanding middle class, and the improved purchasing power of many Filipinos.
Sta. Lucia Land, for its part, will continue to capitalize on the growing OFW market, which has long proven to be a significant driver of growth for the company.
Mariza Santos-Tan, vice president for sales of Sta. Lucia Realty, said they will continue to expand their projects, focusing on areas that will cater to the needs and wants of the market they aim to serve. These include provinces such as Iloilo, Davao and Cebu where the real estate industry is booming, she added.
Earlier this week, Sta. Lucia Land disclosed to the local bourse that it has added 937 hectares of land to its development pipeline this year.
“This is in line with the (company’s) long term plan to increase its nationwide geographic depth and breadth in its residential, commercial and tourism portfolios. Majority of these properties are located in emerging cities adjacent to the company’s existing projects where it has a presence for over five years,” the company’s disclosure to the Philippine Stock Exchange stated.
According to the disclosure, the biggest property deal entered by the company involved 325.34 ha of land in Region 4A which covered the provinces of Cavite, Laguna, Batangas, Rizal and Quezon.
The company also had an additional portfolio of 228.24 ha in Davao, the new center of political power in the country; 153.37 ha in Iloilo; and 1.95 ha in Metro Manila.
Sta. Lucia Land likewise expanded its footprint in Baguio; Pangasinan; Bulacan; Nueva Ecija; Palawan; Cebu; Zamboanga; General Santos; and Negros Occidental.