Why Metro Manila is now a ‘rising megacity’
METRO MANILA is finally catching up with regional peers, as the country sees more property developments, a growing number of high-value workers, as well as an increasingly consumption-driven economy, according to a real estate consulting firm.
Calling Manila a “rising megacity,” Santos Knight Frank said the development of the Philippines has been thanks in part to the information technology- business process outsourcing industry, which effectively increased the demand for office spaces.
“Manila today is the Hong Kong and Singapore of 30 years ago. The level of development in the metropolis over the last decade has been unprecedented and reflects on the accelerated expansion of the property market,” Santos Knight Frank Chairman and Chief Executive Officer Rick Santos said in a statement.
For instance, office rents have been growing at an annual rate of 5-6% since 2011. In the second quarter of 2017, Santos Knight Frank noted rental rates grew at 3.4% year on year, outpacing growth in Tokyo, Taipei, Beijing, Shanghai, Singapore, and Jakarta.
Despite the high rental prices, vacancy rates in Metro Manila were one of the lowest at 3.4% by the end of the second quarter.
“While some of the other Southeast Asian markets are seeing demand remain sluggish and the major Chinese cities are seeing huge amounts of new supply, the Manila market has one of the tightest vacancy rates in the region and looks set for a strong 2018,” according to Knight Frank Asia Pacific Head of Research, Nicholas Holt, in a statement.
The addition of more office space in the market, pegged to be around 3 million square meters (sq.m.) by 2019, will help in the easing of vacancy rates. Aside from BPO firms, the demand will also come from offshore gaming firms, which Santos Knight Frank noted will continue to be a major player in office market.
By 2019, the number of fulltime BPO employees will rise to 1.467 million, from the current 1.25 million.
Alongside the increase in BPO firms in the country, demand for residential spaces are also expected to climb. For this, Santos Knight Frank said around 2 million sq.m. of residential space will come online in the next two years, dominated by middle- income and high-end projects.
“Investor-driven demand continues to bolster the local condominium sales market as average monthly take-up rates continue to exhibit double-digit figures,” the consulting firm added.
Given the continued growth in Metro Manila, Santos Knight Frank said the development of infrastructure outside the metro would be key in decongesting the area. This includes the North Luzon Expressway ( NLEx)- South Luzon Expressway Connector Road, Ninoy Aquino International Airport Expressway Phase 2 and NLEx Harbor Link.
“With limited supply of land in the city core, new districts have emerged in the outskirts of Metro Manila. The next wave of expansion is happening in emerging areas such as Alabang, Nuvali, Bulacan and Clark. It is crucial that infrastructure is in place to provide efficient connectivity between various parts of this growing city,” Mr. Santos said. —