BMI View : The Philippine economy has remained resilient in the face of the Chinese economic slowdown and falling global demand. Strong local consumption, supported by rising employment and incomes, ensures that the economy remains on a growth trajectory and that the outlook for commercial real estate remains bright. In particular, the office and retail segments should provide opportunities for new players.
We forecast real GDP growth of 6% in 2016, up from 5.7% 2015, amid higher government spending that will spur activity in the private sector. The economy also benefits from remittances from Filipinos working overseas and the thriving local business process outsourcing (BPO) industry. However, external challenges come from the slowing Chinese economy, a looming rise in interest rates, the stronger US dollar and weaker Chinese yuan, which will dampen investor appetite.
In the short term, high demand for office and retail space should influence development activity in 2016, while the industrial sub-sector is likely to see growth as a result of rising land values and greater interest from foreign firms.
Manila is the country's capital and economic hub. It is also the dominant retail location, and there is significant foreign interest in all real estate segments of the city. Meanwhile, Cebu benefits from the booming BPO industry, which will drive demand for high quality office space. Makati is regarded as a financial hub, we expect a slight fall in construction activity and demand as the lack of available land puts investors off.
The office sub-sector will benefit from the growth of the BPO, knowledge process outsourcing (KPO) and e-commerce industries in the country. Limited supply and good demand will sustain rental rate rises, although the small development pipeline is not forecast to pick up until after the May 2016 elections.
Growing remittances and rising domestic incomes are sustaining demand in the retail sphere. The growth of the BPO industry in particular is having a positive impact on wages and thus consumer spending. This is transforming the purchasing habits of the young, creating demand for modern retail space.
The industrial real estate sector will receive comparatively less interest in terms of new developments, although rentals will remain stable through the forecast period for Cebu and Makati, while in Manila they will rise amid growing demand for premium grade industrial units.
In the run up to the 2016 general election the property market will remain subdued, as investors await clarity on post-election policies. We think the most significant opportunities will be in the office sub-sector, driven by the booming BPO and IT industries, while retail will also benefit from rising real wages.
The Philippines Real Estate Report features BMI Research's market assessment and independent forecasts of major construction projects in the residential and commercial markets, plus rental prices and yields in major cities. The report critically analyses the prospects for real estate within the broader economic and financial context - both domestic and global - via our econometrically-modelled and clearly explained banking and economic forecasts and follows this through to evaluate the implications for REITs.
BMI's Philippines Real Estate Report provides industry professionals and strategists, sector analysts, business investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the real estate industry in Philippines.
- Benchmark BMI's independent real estate industry forecasts for Philippines to test other views - a key input for successful budgeting and strategic business planning in the Philippine real estate market.
- Target business opportunities and risks in Philippines through our reviews of latest industry trends, regulatory changes and major deals, projects and investments.
- Assess the activities, strategy and market position of your competitors, partners and clients via our company profiles (inc. SWOTs, KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis covering real estate and construction, regulatory changes, major investments and projects and significant national and multinational company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the real estate sector and within the broader political, financial, economic and business environment.
Industry Forecasts Outlook
Historic data series (2010-2013) and forecasts to end-2019 for the domestic real estate industry and for the local and global finance industry.
- Real Estate: Office, retail and industrial real estate yields for all major cities (%); short term forecasts on minimum and maximum real estate rental prices by sub-sector (USD per square metre and local currency per square metre).
- Construction: Industry value (USDbn); contribution to GDP (%); employment (‘000); real growth (%).
- economy: Economic growth (%); nominal GDP (USDbn); unemployment (%); interest rates (%); exchange rate (against USD).
BMI’s Real Estate Risk Reward Index
BMI’s Risk Reward Indices provide investors (real estate vendors, construction companies and financial investors) looking for opportunities in the region with a clear country comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide an indices of highest to lowest appeal to investors, with each position explained.
Overview of the real estate sector, including analysis of existing/planned real estate developments and emerging industry trends in the office, industrial and commercial sectors
Features detailed city-level data and analysis on rental prices, yields, contract terms and real estate availability with separate chapters covering the office, retail and industrial sub-sectors.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.