Rediscovering investment opportunities in real estate

The thought of economic recovery will be on everyone’s lips in the second half of 2021, especially as the government’s COVID-19 vaccination program begins. In the real estate market, where office and commercial space have borne the brunt of the pandemic, such a recovery could be nigh on both inside and outside the subway.

BusinessWorld Insights, in partnership with Alveo Land, hosted a webinar entitled “Investing in Next Wave Cities: Emerging Potential for Real Estate” that sought to predict the immediate future of the country’s real estate sector, particularly emerging markets outside the National Capital Region, to represent.

Claro Cordero, head of research at Cushman & Wakefield, said foreign companies, particularly in the business process management for information technology sector, are being drawn to the upcoming infrastructure projects in areas such as Pampanga, Laguna, Cebu and Davao.

Markets like Pampanga, Laguna, Cebu, and Davao attract investment from large developers. Claro Cordero, Head of Research at Cushman & Wakefield, said during the exclusive webinar that overseas companies, especially in the IT-BPM (Information Technology Business Process Management) area, are being drawn to the upcoming infrastructure projects in these areas and their young and educated workforce.

“The Philippines are still one of the most attractive emerging markets, not only in the Asia-Pacific region, but also in the rest of the world economy. Especially since the very young population of the Philippines is expected to provide a sufficient source of healthy workforce for at least the next twenty years, ”he said.

Ongoing government projects like the NLEx Harbor Link, Metro Manila Skyway Stage 3, Metro Manila Subway, North-South Commuter Railway Project, Malolos-Clark Railway Project, and Laguna Lake Highway, Cordero said, are pushing investors north and north south the capital.

“With an average of 500,000 square meters, the IT-BPM industry is still a strong driver of demand for office space in the country. In the midst of the COVID-19 pandemic, the industry continued to expand in 2020, ”added Phillip G. Añonuevo, Executive Director, Commercial Leasing at Leechiu Property Consultants, Inc.

In 2020, provincial demand for IT-BPM accounted for a record 43% of total IT-BPM sales in the country. The attractiveness of such markets is enhanced by the availability of PEZA buildings, which force companies to buy office space there. Iloilo was responsible for the largest sales in the country, followed by Cebu, Clark and Davao.

“Last year, the demand for office space was just under 182,000 square meters. We hope that by next year that will normalize to maybe half a million square feet and in three or four years. It is entirely possible that we will return to the higher demand, which is the millions of square feet per year that we saw in 2018 and 2019, ”he said.

Mr. Añonuevo specifically named three key areas that have great investment potential in the near future: Cebu, Pampanga and Davao.

“Cebu is a good case study when it comes to real estate investing. It has all the basics: very good government support and real estate available. Cebu is a good example of a city that is prepared and has investors confident of developing properties there. As a result, Cebu is home to many of the world’s largest companies, ”he said.

Phillip G. Añonuevo, Executive Director, Commercial Leasing at Leechiu Property Consultants, Inc., identified three key areas with great investment potential in the near future: Cebu, Pampanga and Davao.

Pampanga, meanwhile, is benefiting from a number of recent infrastructure developments, particularly the upcoming Clark International Airport and its proximity to Metro Manila. Davao has consistently proven itself as a city with solid foundations, and the increase in the number of Master-planned townships in these areas further increases their foreign appeal.

“Outsourcing to the Philippines will continue to be a viable business strategy for many companies for the next ten or twenty years,” said Añonuevo.

“I believe Master-planned communities are a very attractive real estate investment, especially because employers want their employees to be in the best possible environment. It is only a matter of time before companies are confident about investing in new office buildings again and we will see the same real estate growth in the office space as in previous years. “

The makings of an up-and-coming city

In the aftermath of the pandemic, Mr Cordero pointed out opportunities in the real estate industry for investors to take advantage of, aside from the expected surge from IT-BPM activities.

The high-end residential segment is expected to emerge from the crisis as such developments provide a safe environment that can support different lifestyles. The industrial segment, meanwhile, is being sustained by the e-commerce boom, which is driving demand for developments close to sources of work. The retail and hospitality segments should, however, expect a much longer recovery.

“We believe that there are several success factors in a city that make it possible to invest in these new wave cities, which is a worthwhile undertaking,” he said.

“We need to look for these cities that are attracting a lot of investment, cities that focus on social inclusion and urban wellbeing, health equality, cultural and environmental diversity. We need to look at cities with environmental and climate resilience. Cities should have proactive and coordinated prevention, adaptation and mitigation strategies in place to combat climate change in order to secure investments, ”he added.

Cities with competitive advantages that increase their ability to generate talent, knowledge and innovation are cities that not only attract like-minded investors but also aspiring residents and locators, making them a self-sustaining development. He encouraged investors to look for such developments outside of Metro Manila as they would make a more stable investment than the current volatile stock market.

“Investing in real estate during this pandemic is also socially responsible as it helps accelerate economic recovery and growth. Right now we have to seize the opportunity while interest rates are still very attractive and we have to take advantage of the massive fiscal stimulus that the government is also offering. Take advantage of this and we can do our part to ensure that the economy grows again in the shortest possible time, ”he said.

Alveo Land, the country’s leading innovative real estate developer, offers a vibrant portfolio of groundbreaking real estate developments that offer upscale living and working spaces in various thriving and emerging growth centers in the country. Outside the National Capital Region, there are notable projects in Cagayan de Oro, Cavite, Cebu City, Davao City, Laguna, and Pampanga. More information is available at www.alveoland.com.ph.