“The best way to evaluate the performance of the Philippines’ property sector is by the number of tower cranes that you can see left and right along the streets of the capital, and even in the rest of the country’s islands,” notes Rajan Komarasu, Group Director of Concepcion Building and Industrial Solutions (BIS) under publicly listed Concepcion Industrial Corporation (CIC), acknowledging the Philippines’ strong economic growth that has fueled the robust development of the property sector.
According to the National Economic and Development Authority, the dramatic change in the property sector over the last 20 years is mainly driven by rapid urbanization, the rise of the residential sector caused by demand from a burgeoning middle class, and the thriving services sector. Numbers from the National Statistical Coordination Board show that the amount of floor space released for construction in 2014 grew by 22 percent or 25 million square meters compared to the previous year. The first half of 2015 also shows that this value grew 11 percent or 13 million square meters year-on-year.
“Construction projects increased and are ongoing across the residential, office, commercial, and manufacturing sectors,” adds Komarasu. In the first half of 2015, floor spaces slated for construction into offices grew by 72 percent, which translates to an additional 1.6 million square meters of office spaces completed by 2018 to 2020.
“Demands are coming from various industries, but what we’ve been seeing is how the IT-BPO sector exhibits the highest demand for more office space,” Komarasu notes. He adds that construction in the manufacturing segment also climbed by 37 percent in the first half of 2015, or about 1.6 million square meters of new industrial floor space.
“This growth across all verticals is happening in Luzon, Visayas, and Mindanao, which have collectively shown a 5 percent increase in the first half of 2015 compared to last year,” Komarasu adds. Based on the projects of Concepcion BIS, high-rise residential buildings occupy the biggest share of the floor space up for construction in 2014, followed by offices, then industry or manufacturing verticals. “As of September 2015, we are working on a pipeline of projects up to 2020 that amounts to almost 10 billion pesos.”
When it comes to the approaching regional economic integration, Komarasu is optimistic that it will open up the Philippine property industry to foreign entities that will further amplify the demand for office spaces as well as labor resources. “In addition to the higher demand in the labor market, the ASEAN integration could also help in knowledge and talent sharing, where talent from outside could help upgrade the existing talent here, and vice versa,” he points out.
Concepcion BIS, the commercial arm of CIC, provides building solutions—from heating, ventilation, and air-conditioning (HVAC) to escalators and elevators—to consultancy for engineers, architects, developers, and building managers. The group also assists throughout the construction process by providing their expertise in design guidance and project management.