Outsourcing, OFW cash spur growth
One of the industries that continued to expand and benefit from the major calamities that hit the Visayas this year and is expected to continue to expand in 2014 is the real estate and construction industry.
The Philippine economy grew by seven percent in the third quarter of 2013, which is the fifth straight quarter that the country maintained a seven percent or higher Gross Domestic Product (GDP) growth rate.
For the first nine months of the year, the overall growth rate was 7.4 percent, compared to 6.7 percent for the same period in 2012, which was a faster growth rate than the government’s six to seven percent target for the year.
“This continuing impressive GDP growth for the country was supported by strong domestic demand, public infrastructure spending, and recovery in exports,” said Cebu Holdings, Inc. president Francis O. Monera.
Monera added that the real estate industry specifically remained bullish for the first half of the year.
“The second half was filled with challenges brought about by natural calamities such as the earthquake and typhoon, but overall, this year will still end up stronger than last year in terms of market take up,” he said.
Finance Secretary Cesar Purisima attributed the third-quarter growth of the country’s economy to the “robust performance of real estate, renting and business activities, trade and financial intermediation, and increased investments in fixed capital, reinforced by consumer and government spending, and robust growth in external trade.”
The Department of Finance also (DOF) noted that growth was increasingly supported by investments, which rose by 15.6 percent.
“This, plus a structural current account surplus, well-managed fiscal position, and strong governance agenda gives optimism for the future. The government expects to maintain the seven percent growth in the final quarter of 2013, mainly due to Christmas spending and remittance inflows from overseas workers. For 2014, it targets a faster growth of 6.5 percent to 7.5 percent,” he said.
OFW remittances for the month of October reached $2.3 billion, an all-time high, while the BPO sector is poised to contribute $16 billion in revenues for 2013.
Employment generated by the BPO industry and the influx of remittances have increased purchasing power of the middle class, which has in turn sustained the demand for residential units, whether they be for subdivisions, townhouses, and condominiums.
With higher disposable income circulating in the local economy, strong consumer spending has also benefited the retail sector.
“Continued growth in the local property sector is evident even just within the Cebu Business Park and Cebu IT Park, which host the majority of office and residential high-rise developments in the city,” Monera said.
“As of the end of the year, there are currently 14 ongoing construction projects in Cebu Business Park and five constructions in Cebu IT Park for residential, office and commercial purposes. Once completed, these projects will bring in a total gross floor area of 434,800 square meters and 94,400 square meters respectively,” he said.
For CHI and the Ayala products in Cebu, our data show that the second quarter had the strongest take-up for residential projects this year.
Office and commercial leasing remains robust with high occupancy rates among our various projects throughout the year. In fact, this year, we are nearing completion of eBloc Tower 3, and started construction on two more BPO buildings – the ACC Corporate Center and the eBloc Tower 4. We foresee continuing demand with more office projects in the pipeline.
In the retail sector, based on data from Ayala Center Cebu, the second quarter showed the highest growth as well. This may be attributed to preparations for the school year and increased tourist arrivals for the summer months.
In the second quarter of the year, there were several successful launches of residential projects in Cebu among various developers. That quarter saw very strong performance of Ayala Land’s projects, namely Avida Towers Riala, Alveo’s Solinea Towers, and Ayala Land Premier’s Park Point Residences.
“Part of what triggered the growth is the credit rating achievements which have increased investment interests in the Philippines, as well as a stable political climate under the current administration. With a better credit standing, key interest rates were low, offering good debt financing opportunities for real estate. These have also increased investor confidence, encouraging increased foreign direct investments, especially in the BPO sector,” said Monera.
The healthy economy, growing consumer spending, and a sustained remittances also made the local market for attractive to more international retailers, and thus buoyed the retail property sector.
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