PH real estate on the move as election fever rises
The Philippine real estate industry, and the economy in general, are moving forward at a steady pace as the nation gears up for a colourful campaign leading to the national polls in May, 2016.
Real estate developers and property players are banking on more sales by the end of the year, and are planning to take advantage of increased spending as a plethora of local politicians jockey for position during the election season.
Power of recurring income
The retail market with its various platforms is aggressively being pursued by top developers, because of its power of recurring income. While residential sales are generally brisk, once a project is fully sold out, a developer would have to do it all over again for another project in a different location. Unlike a strategically located shopping mall, it would provide steady annual net income.
The SM Group has a total net income of Php 18.7 billion for the first half of the year, and almost 60% comes from recurring income. This is the power of 52 SM Stores, 41 SM Supermarkets, 43 SM Hypermarkets, 127 Savemore stores and 27 WalterMart stores.
Ayala Land Inc. (ALI) is planning to open at least five new shopping malls in the next few years in line with its goal to earn a net income of Php 40 billion by 2020. It also plans to develop the nine-hectare mixed-use complex in Parañaque City with an anchor shopping mall. The Ayala Land Group earlier secured a 45-year lease for the 9.2-hectare property from the Wenceslao group, the owner of the Aseana Business Park complex, for the project.
COSCO Capital Inc., the listed company of Puregold’s Lucio Co, recently acquired RFC mall along Alabang Zapote in Las Piñas City. RFC has a total lot area of about 7,600 sqm and a gross floor area of about 23,000 sqm. The acquisition will add to the Group’s existing 35 stores with a total GFA of 343,000 sqm. Cosco/Puregold Group is planning to open eight stores in the next three years.
The Megaworld Group is joining the race with its plan of putting up 20 malls in the next five years. The Vista Land Group is integrating its retail platforms with its housing projects.
Another player that is making its presence felt is the Cebu-based Gaisano-owned Metro Retail Stores Group, Inc. (MRSGI). It recently opened its 20th branch Luzon, located in Calamba, Laguna. The Gaisano Group has grown its hypermarket portfolio to 12 stores in just three years. In total, it has 46 stores in key cities around the Philippines.
A little bit of a flutter
Hotels with casinos are sprouting up, even with the tight regulation of the Philippine Amusement and Gaming Corporation (PAGCOR).
The Ayala Land Group plans to invest as much as Php 30 billion in the next five years to put up Seda hotels across the country. It is even considering bringing the Seda brand broad. The Ayala group currently has four Seda hotels located in Bonifacio Global City, Cagayan de Oro City, Davao City and Sta. Rosa, Laguna.
Robinsons Land Group is another veteran in hotel development. While it has foreign partners running the Crowne Plaza and Holiday Inn, it has been steadily increasing its budget hotel--- Go Hotel. At present, it is operating nine hotels and is gearing up for its 10th location, probably in Davao. The nine sites are in: Bacolod, Butuan, Dumaguete, Iloilo, EDSA-Mandaluyong, Ortigas Center, Otis-Manila, Puerto Princesa and Tacloban.
To boost hotel development, the Department of Tourism (DOT) is motivating developers by endorsing for incentives a total of over Php 12 billion worth of tourism projects with the Board of Investments (BOI) and the Philippine Economic Zone Authority (PEZA). DOT identified nine hotels that will add 651 rooms to the industry.
The Philippine Economic Zone Authority (PEZA) has 316 operating economic zones under its supervision, hosting approximately 3,500 companies. Apart from these ecozones, the Clark Special Economic Zone (CLARK) and the Subic Bay Freeport Zone (SUBIC) have offered thousands of hectares to manufacturers in the past. In recent months, even with the sprawling CLARK and SUBIC, vacancy of industrial space is less than 200 hectares.
A number of foreign manufacturers have been looking for suitable industrial properties. PEZA intends to expand its Mactan Cebu International Airport (MCIA) by at least 30 hectares. The Bases Conversion and Development Authority (BCDA) intended to privatize the 200-hectare Clark Green City by way of joint venture, but the public bidding failed to enticed investors. While the government is going through its usual process of land development, supply of suitable industrial space is expected to tighten.