New Business market report from Business Monitor International: "Philippines Real Estate Report Q3 2013"

Boston, MA -- (SBWire) -- 06/27/2013 --The Philippines Real Estate report examines the commercial office, retail, industrial and construction segments in the context of a sector on the rise. After a year of outperformance in 2011/12 and a strong start to the year, the outlook for the remainder for 2013 remains relatively rosy, although macroeconomic headwinds are on the horizon.

With a focus on the principal cities of Manila, Makati City and Cebu City, the report covers the rental market performance in terms of rates and yields. It also examines how best to maximise returns in the commercial real estate market, while minimising investment risk and exploring the impact of the government led growth on a market soon to be characterised by public-private partnership (PPP) construction.

A recent pledge by the Philippine government to boost infrastructure spending, as well as to improve monetary conditions, suggest that a sustained uptick in construction activity is on the cards in the short-tomedium term. This will surely have positive repercussions for the industry, in the form of increased demand and most importantly a spur in supply. What's more, the much-touted PPP scheme seems to have finally taken off.

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BMI warns, however, there may be a bump in the roadmap towards ongoing growth in the sector, in the form of the present macroeconomic backdrop. Given the government's continued inability to promote growth-positive initiatives, we continue to see the Philippine economy growing well below potential over the medium term.

Key Points

- We expect the Philippines' residential and non-residential construction industry to continue to flourish over 2013, following a strong performance over 2012. Our forecast is based upon the convergence of a number of positive factors; we believe that the industry will benefit from a prolonged period of deflation, leading to an uptick in lending and a decline in the price of inputs in the construction process. The subsector will also benefit from a promising market for PPPs and an impressive consumer story. Downsides to our forecast include an underdeveloped credit market, stuttering foreign direct investment inflows and a relatively risky business environment.
- The announcement by Alliance Global Group Inc (AGI) that it may spend over US$1.5bn on hotel rooms over the coming seven years bolsters the outlook for leisure construction in the Philippines, and provides further support to our bullish outlook for the residential and non-residential sector. We believe that the sub-sector will grow in real terms over 2013, and continue upon this robust trajectory. The plans, which would make AGI the largest hotel operator in the country, follow on from a stream of announcements by firms looking to benefit from a government-backed tourism infrastructure investment drive.

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