Manila now a top real estate investment market in Asia - survey

Posted at 01/10/2014 11:53 AM | Updated as of 01/10/2014 12:03 PM
A view of Makati skyline

MANILA, Philippines -- Manila has emerged as one of the top real estate investment markets in Asia for 2014, according to a new survey by the Urban Land Institute and PwC.

In ULI and PwC's "Emerging Trends in Real Estate Asia Pacific" report, Manila ranked fourth out of 23 Asian cities in terms of city investment prospects.

Tokyo, Japan regained its status as the region's most popular investment destination, followed by Shanghai and Jakarta. Manila outranked Sydney (5th), Guangzhou (6th), Singapore (7th), Beijing (8th), Osaka (9th) and Shenzen (10th).

The report attributed for the Philippine capital's rapid rise in the survey to its fast-growing economy, as well as its increasing popularity as a destination for multinational companies for outsourced services. Also cited were the perceived improvements in transparency and governance issues that have long plagued the country.

"A big mover is Manila, which is up to 4 from 12 last year... We've been hearing for a couple of years now the success and impact of the BPO sector, as well as the positive demographics and GDP growth," John Fitzgerald, ULI Asia Pacific chief executive, said during a presentation on Thursday evening.

Fitzgerald said the survey showed investors are increasingly willing to look at emerging markets such as Manila and Jakarta, as alternatives to traditional markets.

Manila, which ranked 8th in city development prospects in the survey, was also cited for its young demographic, strong capital inflows from overseas workers, and a workforce with a cultural affinity with the West.

"Despite the impact of super typhoon Yolanda and the expected withdrawal of the US Federal Reserve's economic stimulus, there are other factors going for us, such as the record-setting remittances from OFWs, increased number of investments and the lower cost of borrowing," Alexander Cabrera, chairman and senior partner at Isla Lipana & Co., PwC member firm in the Philippines, said.

But the report noted that Manila can be a difficult place to invest in due to "laws that prevent foreigners from majority ownership of land and partly because there is already plenty of domestic liquidity."

Manila also received a "buy" rating for its residential, office and retail sectors, showing the investors' confidence in the local market.

"Manila is a favorite for the office sector, as it was for residential, and for many of the same reasons: an influx of foreign companies has arrived on the market, supporting already buoyant sentiment in a strong economy. Manila also offers the highest prime office yields in Asia, averaging about 10%," the report said.

The Emerging Trends report indicated a generally positive outlook for the real estate markets in the Asia Pacific region, particularly Japan's return as the favorite market for investment and development.

Japan's resurgence was attributed to the government's massive economic stimulus plan, which led to many investors snapping up properties in anticipation of higher prices.

Emerging Trends provides an outlook on Asia Pacific real estate investment and development trends based on opinions of international real estate professionals.

Emerging Trends' City Investment Prospects ranking, 2014:

1. Tokyo
2. Shanghai
3. Jakarta
4. Manila
5. Sydney
6. Guangzhou
7. Singapore
8. Beijing
9. Osaka
10. Shenzhen
11. Bangkok
12. China's secondary cities
13. Melbourne
14. Kuala Lumpur
15. Seoul
16. Taipei
17. Auckland
18. Hong Kong
19. Ho Chi Minh
20. Bangalore
21. New Delhi
22. Chennai
23. Mumbai