The upcoming integration of the Asean Economic Community or AEC beginning December this year is expected to open new and bigger markets and opportunities for Philippine business, but the big question is, are we ready?
According to a study conducted by real estate consulting firm Pinnacle, it would seem so.
Leading the pack is the local real estate industry, which is investing huge amounts of money in expectation of a bigger demand ahead.
Pinnacle noted that the Ayala Land Group is leading the way by increasing its capital expenditure budget to P100 billion this year as compared to only P70 billion last year, or a 43 percent increase. Apart from increasing its usual residential developments, the Ayala Group is also boosting its office, shopping center, and hotel portfolio. It is even embarking on education and hospitals, if I may add.
SM Prime meanwhile has disclosed a capex budget for 2015 of P66 billion to open more shopping malls, residential projects, office buildings, and hotels. The SM Group, aside from its malls and condominiums, is also increasing its hotel business. It currently has four hotels and it is targeting to open its Park Inn by Radisson in Clark, Pampanga and Conrad Hotel Manila at the Mall of Asia by the fourth quarter of this year.
The study also mentioned the Megaworld Group, which is targeting to invest more than P230 billion until 2018. The group is sustaining its township developments and together with subsidiaries Suntrust Properties, Empire East, and Global Estate Resorts Inc., it is launching five new townships: two in Luzon, two in the Visayas, and one in Mindanao, with a total land area of around 400 hectares. This will bring Megaworld’s total township land area to 3,100 hectares by yearend.
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Other players are also busy increasing their market share while expanding the pie as well. The Pinnacle study cited Robinsons Land as having recently acquired the 18.5-hectare Mitsubishi property along Ortigas Avenue extension, where it would build a major township. In addition, it would expand its residential, office, hotel, and mall portfolios nationwide.
Vista Land and Puregold, on the other hand, are intensively exploring their core competencies, Pinnacle emphasized. Vista Land has been penetrating tertiary cities where other national brands are still contemplating, and has been expanding its commercial retail investments. On the other hand, Puregold has been solidifying its position in the retail sector.
Other major players are also expanding into other sector such as transportation and tollways. DMCI, Filinvest, and Federal Land of the Metrobank group, have been steadily beefing up their investments in the power sector as well.
Pinnacle also pointed out that the property market remains to be strong across all sectors and that the top developers are expecting that the pie will expand due to the sustained growth of the Philippines as well as the impending ASEAN economic integration.
It noted that they are enlarging their plates by partnering with international investors and enhancing their capabilities, adding that the top players are comfortable in slicing their markets, by focusing on their core competencies, by servicing various segments and sectors, and by building townships.
For the not-so-big players, Pinnacle advised that it is important to identify opportunities and inefficiencies in the market, then servicing them decisively. Since the pie is expanding, small players do not need big market share, but rather a profitable niche in the market, and that these small players should take advantage of their nimbleness and ability to service smaller projects.
And now for specific markets in the property sector.
The study mentioned that the business process outsourcing industry will continue to drive the demand for office spaces across all major business districts. In the Makati CBD, while the Grade A vacancy is at its all-time low, four buildings are expected to be finished with a total leasable area of around 150,000 square meters.
Office vacancy in the Bonifacio Global City slightly increased to four percent due to the opening of the Panorama Building. New stock, however, is expected to open this year and next year with a combined leasable area of about 500,000 square meters. While some of these buildings have pre-commitments, the succeeding quarters would test the absorption of the market based on the demand of the BPOs, Pinnacle said.
For the residential sector, Pinnacle reported that based on data from the HLURB, total license to sell issued for 2014 reached over 200,000 residential lots/units, including condominium units. More than half of this or around 105,000 units are in the socialized and low-cost housing categories. Mid-income housing units account for 28,000, while residential condo units account for 76,000.
Another exciting and fast-growing field is the retail market, which as pointed out by Pinnacle, is still dominated by the SM Group, which will have 53 malls in the country and six in China by yearend. These malls have a total leasable area of 7.8 million square meters.
The Robinsons Land Group, with its 37 malls, is also busy expanding. It targets to open seven malls and expand three existing malls in the next two years.
Meanwhile, the Puregold/Cosco Group has been accelerating expansion, not only through organic expansion, but also through acquisitions, the study noted. It recently acquired nine malls in Nueva Ecija and has a joint venture with Lawson, the third largest convenience store chain in Japan.
The Ayala and Rustans Group, which are currently charged with the operations of about 100 Family Mart outlets, have also partnered with the Puregold Group.
The Villa/Vista Land Group is likewise gearing up in expanding its Starmall platform, as well as its convenience shopping “All Day Mart.” The group has built over 250,000 housing units in 31 provinces and 64 cities and municipalities and is integrating their retail platforms in their housing projects, the study mentioned,
Also, the Wilcon Group, the country’s largest one-stop shop for construction and design materials, recently opened its 15-storey Wilcon IT Hub building in Pasong Tamo. The group now has 33 stores all over the country.
Another company, HMR Philippines, is quietly expanding its retail operations. Known for its public auctions, its products are not directly competing with the traditional retail malls. HMR now has 15 stores offering discount shopping of brand new as well as used items, the study said.
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