MANILA, Philippines - The North Luzon Urban Beltway is now a rising investment destination, with Clark and Subic freeport zones attracting foreign investments, according to property consultant CBRE Philippines.
In a report, CBRE noted that infrastructure developments such as the North Luzon Expressway, Subic-Clark-Tarlac Expressway, Clark International Airport, as well as the Global Gateway Logistics City and a South Korean firm's leisure tourism estate in Clark, have helped boost the region's growth in recent years.
Central Luzon is the third largest contributor to the national economy with a 9.1% share of GDP in 2010. In 2011, the region posted the highest GDP growth in the country with 11.9%, even higher than NCR and Calabarzon.
Clark and Subic Freeport Zones have also continued to attract investors, thanks mainly to the fiscal and non-fiscal incentives offered to manufacturing locators. Subic has also attracted tourists, with its leisure tourism developments.
Many leading property developers have also entered the Central Luzon area, with Robinsons Land opening a Go-Hotel branch in Clark and Megaworld reportedly developing a 550-hectare property in Clark into a mixed-use complex.
"With all these infrastructure developments and promising macroeconomic indicators underway, the North Luzon Urban Beltway is poised to be the next major destination of the country," CBRE said.
Property sector booming
With the region's strong growth, it is no surprise that the property sector is also booming.
CBRE said the resurgence of the manufacturing industry has boosted occupancy for industrial spaces in Clark and Subic Freeport Zones. It noted that lease rates are expected to be stable, as anticipated demand will be met by the available supply of land.
Japanese and Taiwanese firms have led the upturn in the manufacturing industry in Clark and Subic. In Clark, Japan's top tire maker Yokohama Tires is expanding production through 2017, and while Japan-led Ingasco is developing a $40 million air separation plant.
Meanwhile, business process outsourcing companies have driven the demand for office space, especially in Clark.
The Philippine Economic Zone Authority (PEZA) decision to restrict fiscal tax incentives for new IT facilities in Metro Manila and Metro Cebu has benefited Metro Clark, since it is the only established IT-BPO hub in the country still enjoying tax incentives for new IT parks and facilities developers.
"The PEZA resolution has emphasized Metro Clark as a high potential investment destination. The large talent pool combined with developments in infrastructure of the region has helped in sustaining the BPO growth. With the entrance of new locators and expansion of previous tenants in the BPO industry, the real estate office segment is seen to expand in the coming years," CBRE said.
Demand for quality residential developments
As more foreign investments pour into Clark Freeport Zone, there is also an increased demand for quality residential developments.
CBRE noted the growing number of locators in Clark has increased the demand for expatriate residential housing. Central Luzon region had recorded 16,000 foreign citizen households in 2010, the third highest in the country after NCR and ARMM.
"In response to the evident high investment potential, developers have started launching new residential projects inside the Clark Freeport Zone and its fringes," it said.
Four horizontal subdivisions and two condominium projects are adding to the supply in Clark with about 1,076 units. However, these projects cater mainly to expatriates working inside the Clark Freeport Zone, including one that is exclusively marketed to Korean nationals.
Outside the Clark Freeport Zone, some of the country's top property developers are also launching projects aimed at the growing residential market driven by OFW remittances and flexible bank lending terms.
For instance, Ayala launched the second tower of their Marquee Place Residences in Angeles City in 2012. Projects by Robinsons Homes, Vista Land, Filinvest, Pro Friends, Fil-Estate and Moldex Realty are also sprouting up.
"Residential demand is seen to grow with the upcoming investments and expansion in the CFZ. Vertical residential developments are now seen rising in the area as developers try to maximize their investment on land," CBRE said.