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Wednesday, December 21, 2011

Real Estate Forecast : 6 things you should know about real estate in 2012

One of the basic assets that a number of Filipinos value is real estate – whether it’s an ancestral house in the heart of the business district, an underutilized building, an empty property, or a farm lot in the province.

With 2012 less than a few months away, asked Victor Asuncion,Executive Director for Global Research & Consultancy of CBRE Philippines about what he sees in the future of real estate in the country.

In this Q&A, we discuss what sectors will boom in 2012, which ones to avoid, and what you can do with your property to turn it into an asset in the coming year.

1. What is your forecast for the growth of real estate in Metro Manila for 2012? 

The macroeconomic indicator of the real estate industry is the gross value added of real estate renting and business activities (i.e. sales transaction/ revenues/ earnings of real estate businesses) which registered a year-on-year growth of 6.8 percent  (i.e. 2009 vs. 2010). However, for the last 10 years, the compounded annual growth rate is at a low 4 percent given the fluctuations of the property cycle.  For 2012, given the Public-Private Partnership trust of the government and the continued growth by the drivers of the real estate industry i.e. OFWs, BPOs, Tourism and also Mining in selected area, we expect a growth of between 5 to 10 percent.

2. How about in the other major cities in the country?

The drivers of real estate for the Philippines in 2012 will still be OFWs, BPOs, Tourism and also Mining in selected areas. This will be mainly felt in key locations such as the Subic-Clark Economic Corridor, Metro Manila particularly the business districts namely Fort Bonifacio, Quezon City, Ortigas and its fringes, Bay Area and Alabang.  For the South, we continue to see growth in Metro Cebu, Metro Davao, Iloilo and Bacolod City plus the major tourist destination such as Boracay and Palawan.

4. What sectors to avoid?

While the industrial segment continues to be a laggard, it should not be avoided because it sustains itself mainly from the consumer demand for consumer goods i.e. domestic market.  There are still strategic industrial or logistic sites across the country like Subic, Clark, Sta. Rosa, Calamba and Cavite.

5. In what real estate sector would it be most wise to invest in this coming year?

In my opinion, the most promising sector will be the Hospitality Industry given the target growth of foreign tourist arrival, more liberalized and competitive airline industry and the infrastructure developments of the government related to tourism like building and renovating the airports.

Gaming is also seeing its way into the Philippines. Thus, hotel and leisure development for this market is expected to be strong.  Thus, investment in this segment will be favorable and lucrative.

6. What trends should we anticipate for the real estate industry next year?

All businesses are conducted with the use of real estate, whether air, sea or land.  Thus, demand for real estate will continue to be strong.  As the Philippine population approaches 100 million, a consumer based economy is emerging with all the needs and wants of this market growing year-on-year.  Therefore a wise developer, investor and even creditor should partake of the strong potentials and opportunities of this specified market. An example is the OFW families given their dollar remittances expected to hit another record amount of US$23 billion for 2011.

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