PH real estate market struggles to keep pace with ASEAN neighbors

Because of restrictions to foreign ownership, the Philippine property market will continue to struggle in keeping pace with its Southeast Asian neighbors in terms of being lucrative investment havens, a data from real estate services firm JLL showed.

Claro Cordero, JLL Local Director and Head of Research, Consulting and Valuation, said he is confident that the demand for office spaces will begin to pick up again as early as the last quarter of 2017 due to the resurgence of potential demand coming from the expansion of BPO firms in the Philippines.

He also believes that there is still a need to cater to other traditional demand drivers like banking, financial institutions and technology companies, adding that the new interest shown by online gaming industry for office space in the country is also something to look forward to.

But while all of these are happening, Cordero said Vietnam and Indonesia are giving the Philippines stiff competition.

The growth and the opening of the Vietnamese economy is giving their people more flexibility in terms of spending and buying properties. More than that, Vietnam, unlike the Philippines, allows foreign ownership of land.

"I think the Philippines’ biggest disadvantage is the limitation on property ownership specifically on land because it really doesn’t make sense for foreigners to invest in a market where they can't have majority. Having complete control over a property, both the land and the structure, allows them more flexibility in operating their business," Cordero said.

To meet foreign investors half way, JLL then recommended that land lease terms to foreigners be increased to 50 years minimum without break clause.

Meanwhile, Indonesia has been a goto location because of sheer population. And while population has a natural way of affecting the flow of transportation and services, Indonesia already built the needed infrastructure to address the anticipated traffic bottlenecks much earlier than the Philippines.

Nevertheless, Cordero said it is not too late in the game for the Philippines as the current infrastructure projects aimed at decongesting Metro Manila should also help open up new markets.

From the property perspective, he said this will mean more projects in the vicinities near the metropolis like Laguna, Batangas, Bulacan, and Pampanga notably Clark.

Cordero added that, compared to both Vietnam and Indonesia, the Philippines’ property market enjoys the edge when it comes to demography.

While the country’s population is smaller, the population is much more cosmopolitan. On top of that, consumption levels are also on the rise- not just because of the presence of BPOs, but because of the influx of remittances coming from Filipinos overseas.

"With so much foreseen developments, JLL, the country’s leading property consultant, believes the Philippine real estate market will continue its upward trend despite the challenges that continue to confront it," Cordero further said.