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How A Mega City Turns Real Estate Into A Mega Industry

by DMCI Homes Leasing on August 3, 2015 | Categories: Investments, Real Estate Industry

flair towers mandaluyong
Flair Towers, Mandaluyong City, DMCI Homes

The Philippines is slowly writing itself a beautiful economic story. Gone are the days when the country was known to be the “Sick Man of Asia” as the country continues to register growth rates that rivals that of China and India. Credit ratings have improved, and while the gross domestic product (GDP) for the first quarter fell below expectations, economists and government officials still have reason to project that the economy can grow by as much as 9% this year. That is not just a very optimistic projection, but a calculated one.

As the Philippines is on its way to being an emerging economy, Metro Manila is also being recognized for being dynamic and competitive. In a research by international real estate services giant JLL, Metro Manila was listed as one of the top 30 megacities in the world. For the first time ever, Metro Manila was recognized as one of the globally competitive cities given the country’s GDP growth and a young working population. Research director Jeremy Kelly said Manila is “on the rise and its future is full of optimism” that it can even overtake Hong Kong, Istanbul, and Mexico City by 2030.

BPO industries, foreign confidence and investments, and the continued boom in the real estate industry are among the reasons why Metro Manila is a mega city. The year 2015 is seen to be another strong year for real estate as the demand for  the residential, office, and rental segments of the market remain high. The real estate boom has given the go signal for more vertical developments and made condos worth an investment. Should you also make the jump? Can a globally competitive city like Metro Manila really turn things around for the business person in you?

 

Rental Market Is On The Rise

stellar place roofdeck
Stellar Place’s Roof Deck, Quezon City, DMCI Homes

A growing number of buyers have a different take on condominiums, that of condo as an investment. Did you know that a 35 sq.m. condo in a prime location like Makati, Ortigas or BGC can be rented out for at least Php 25,000 a month? Condo leasing has become a practice because it is like hitting two birds with one stone — you can earn from the monthly rental yields and you still get to own the condo in the future.

The idea of condo living isn’t just for the wealthy and well-to-do to experience anymore. Today, young professionals, couples, and empowered millennials do not mind spending more for comfort and convenience. This is why condos for rent are a big hit. Renters get to experience condo living without the need to buy one.

Most condos for rent in the Philippines are located in prime districts and close to offices, schools, malls, and public transportation. With rising pump prices, poor public transport options, and the terrible traffic, renters understand that they actually save time, money, and sanity by living in condos near their workplace.

The rise in the residential rental market makes a city more competitive. There is more financial activity and there are better business opportunities in an area where professionals and taxpayers thrive. From restaurants to laundry businesses and small to medium enterprises, all have the opportunity to earn big given a market with great purchasing power.

 

PH Is A BPO Hub

the amaryllis qc
The Amaryllis, Quezon City, DMCI Homes

The rise of real estate industry goes hand in hand with the rise of the business process outsourcing (BPO) industry. Hans Sicat, president of the Philippine Stock Exchange notes that the BPO sector continues to grow not just in terms of people but also in skills. He predicts the “sunshine industry” to even shine brighter as the market and demand for English-speaking Filipinos is on the rise. In fact, the Philippines has already overtaken India as the call center capital of the world. And that is just the start.

Aside from its obvious effect in employment numbers, the BPO sector is also driving the demand for more office space. The real estate industry is seen to benefit from this as construction for more buildings and rental units are expected. Estimates by CBRE Philippines showed that BPO companies will likely to occupy 80 to 90 percent of office space supply this year.

As for residential unit owners and sellers, their market for potential renters and buyers was also given a boost by the growing number of BPO workers. The BPO industry is expected to create 1.6 million jobs by 2016 which only means more young professionals looking for a place to stay.

 

Double The Value

By the time the pre-selling condo you bought is turned over, its value already increased. The value of a property increases as the development around it becomes more competitive. When a mall or a business center is only a few minutes away, the cost of the property is expected to go up, too. As the city progresses, so are the property owners who are lucky to have made the investment.

 

Hopes Are High

la verti roof deck view
La Verti Residences’ Roof Deck View, Pasay City, DMCI Homes

In the 2015 research, Emerging Trends in Real Estate Asia Pacific, Metro Manila ranked eighth among Asia Pacific cities in terms of investment and development prospects. Metro Manila ranked higher than Singapore and Bangkok. Strong economic growth and confidence among businessmen to invest made the city popular. And in the next five years, the Organization for Economic Cooperation and Development projects the Philippines to have the best growth forecast among Southeast Asian nations. This growth momentum will trickle down to most industries in the Philippines including real estate, which is seen to reap the majority of progress given the demand for more buildings, offices, and residences in the business centers.

 

Metro Manila’s competitive edge is credited to the progressive economy, improving credit ratings, aggressive young professionals, booming construction, etc. This global competitiveness opens a lot of opportunities for industries, businesses, and professionals. Sectors like the real estate industry will just be going along with the increase in demand and deliver. When a city is viable to success and progress, everything else follows.

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