Upbeat economy to fuel property sector growth
The country’s strong economic growth will continue to fuel the property industry, particularly with the government’s increased infrastructure spending push, Colliers International Philippines said yesterday.
"The country’s property sector remains upbeat as it is fueled by a robust macroeconomic environment," Colliers said in a report released to media Thursday.
The real estate services firm said it sees office, residential and retail segments benefiting from the approval of the first package of tax reform and the planned relaxation of foreign ownership restrictions in key economic sectors such as retail and construction.
"Overall, we expect the local property market to benefit from the government’s commitment to accelerate infrastructure spending," the Colliers report said.
This is reflected by public construction rising by a robust 12.6 percent in the third quarter of the year despite a high base (+20 percent) in the same period in 2016, an election year; and an 8.3 percent increase in government spending.
A major risk, however, is the implementing agencies' low absorptive capacities or their inability to fully spend their budgets, it said.
The Philippines' gross domestic product (GDP) accelerated by an impressive 6.9 percent in the third quarter this year, beating analysts’ forecasts.
The growth clocked during the period is faster than the 6.7 percent posted in second quarter and slightly slower than the 7.1 percent recorded in the same period last year that benefited from spillover effects of election spending.
Year-to-date growth stands at 6.7 percent, well within the government’s projection of 6.5 percent to 7.5 percent. The country remains as one of the fastest growing economies across Asia, outpacing China’s 6.8 percent and Indonesia’s 5.1 percent and only behind Vietnam’s 7.5 percent.
Moreover, Colliers believes ramped up public infrastructure outlay should open more opportunities for firms engaged in construction, and operation and maintenance of key transport infrastructure.
It encourages developers and tenants to take advantage of the country’s buoyant macroeconomic backdrop by implementing the key measures.
Colliers noted that mall operators should complement their physical stores with expanded presence on online selling platforms to maximize the Filipinos’ rising disposable incomes and proliferation of e-commerce throughout the country.
For condominium developers, they should strengthen their respective selling and leasing teams and continue looking for second and third tier locations viable for horizontal (house and lot) development.
"Office space developers should continue targeting offshore gambling firms as they are projected to occupy additional space by 2018," Colliers also said.
Aside from private-sector driven growth, Colliers believes that the sustainability of the Philippines’ real estate sector will primarily hinge on key government policies set to be implemented next year such as the first package of the Comprehensive Tax Reform Program.