The Philippine real estate (RE) sector has demonstrated not only resiliency in the face of pandemic-driven disruptions, but also stability and positive performance, as well as adaptability, as it continues on the road to recovery.
With the Philippines ramping up its gains in Real Estate this 2022, we sat with Mr. Luis Enrique T. Mangosing, Chairman Emeritus of JCVA and an acclaimed Real Estate Maestro, to learn his thoughts about the robust growth of regions outside of NCR, real estate prospects you should watch out for, and insights on what would it take to help drive real estate in the Philippines forward.
Growth beyond NCR
NCR has been the economic powerhouse of the Philippines for some time now. However, on April 28, according to a press release from the Philippine Statistics Authority (PSA), Calabarzon* or Southern Luzon was the fastest-growing region in 2021, with a growth rate of 7.6 percent, much exceeding the national growth rate of 5.7 percent. The National Capital Region (NCR) increased at a modest 4.4 percent, which was also the rate of growth it was experiencing prior to the pandemic.
When asked about his thoughts on the subject, Mr. Mangosing states, “It's inevitable as the NCR is overpopulated and disorganized in terms of its evolution except in a few areas. Government in the past administrations have enacted incentives for industries and developments to move out of NCR, and this has to be sustained for it to take effect more significantly.” Specific regions investors can look out for according to Mr. Mangosing would be Central Luzon, Iloilo, Bacolod, and Davao regions.
This data reflects the Duterte Administration's enlightened policy of focusing the majority of government-funded infrastructure projects on rural areas that were undeveloped.
Mr. Mangosing agrees that the improved accessibility to fringed regions, the Build, Build, Build program was responsible for an extremely high growth rate of Gross Capital Formation.
However, he mentions that some areas in our country’s policy need further enhancements to advance our country’s efforts to attract more investors in the said regions. He states, “long overdue is the approval and roll-out of a national land-use plan which should rationalize real estate development not just in the NCR region but also in all urban centers outside of NCR.” He then continues to explain, “A well-thought-out land-use plan that is strictly enforced puts order into the development of cities and suburban areas, and optimizes the mix or allocation between the various uses of real estate, i.e., agriculture, industrial, tourism, based on the needs of the population.”
Further on the horizon
With a growing discerning market, Mr. Mangosing expresses that property developers looking to explore opportunities should “look for growth corridors where new transport infrastructures are planned that will ease the movement of people, goods, and services to and from urban centers.”
What’s more, property developers are faced with the challenge to be able to showcase their strengths in style and substance in order to appeal to investors. Mr. Mangosing believes that in order for property developers to succeed, they should have a clear idea of who their target market is, then align its product offering and pricing with the target market in mind. For the commercial sector, there are 2 types of tenants, the traditional and the BPO. Each would have different requirements and needs in terms of the quality of the space,” he explains.
“If the developer is targeting traditional tenants (i.e., financial services, insurance, regional headquarters, etc.), then the location, size of the floor plate and the building’s performance specification should be aligned with the needs and requirements of the clientele.
Brace for what’s ahead
Finally, JCVA’s Chairman Emeritus predicts that this year will definitely be more positive than the previous year. We believe that the only thing that could slow down this progress is the turnover of the government to the new president-elect since many clients are concerned about how real estate rules and regulations may affect their operations.
Nevertheless, real estate investment is always a sensible decision, but fortunes can change in an instant. With all his years in the industry and as a bonafide maestro, his stance remains firm that “there will always be a downturn [with any transaction decisions], and therefore, be on the lookout for the relevant signs and indications, and be prepared for it.”
“Look at the potential risks of doing business and [always] set up your plan Bs and Cs” he adds.