The popularity of leisure-oriented developments

The pandemic has highlighted the need for greener, more open spaces. This is a major reason why property firms now offer bigger spaces, whether for condominium or horizontal developments. These projects are classified as upscale and luxury developments based on total contract prices but are among the best-selling projects in the market post-COVID. We expect developers to continue launching similar projects, but the first movers definitely have an advantage.

Colliers Philippines believes that it is imperative for property firms to take advantage of the rising demand for resort-themed projects across the country. For one, these projects are banking on the revival of the Philippine tourism market, which the Marcos administration continues to aggressively promote. The tourism sector remains one of the major job-generating economic sectors of the Philippines, and the government’s emphasis on the sector will substantially benefit developers catering to local and foreign markets.

Leisure-themed developments also benefit from improving connectivity. Major projects in the Cavite-Laguna-Batangas (Calaba) corridor, for instance, are taking advantage of improving access from Metro Manila to Southern Luzon. Hordes of people visit their favorite destinations in the south during weekends and holidays, and the ease of travel has been facilitated by the completion of major public projects, including those connecting cities from north to south Luzon.

IMPROVING CONNECTIVITY AND LEISURE-ORIENTED PROJECTS

The leisure sector stands to benefit from the new and upcoming infrastructure projects. From the modernization and expansion of airports to the upgrading of roads, particularly those that lead to new and exciting tourism spots, Colliers believes that these joint infrastructure implementation efforts between the government and private sector players should help the government accommodate more international tourists and entice long-haul and high-spending ones, especially now that the Philippines intends to attract 7.7 million foreign visitors this year and 12 million in 2028.

The foreign visitors should eventually be enticed to invest in the country, adding a layer of demand to the already strong upscale and luxury markets.

RISING DEMAND POST-COVID

Developers have been taking advantage of the rising demand for resort or leisure-oriented properties outside Metro Manila. These projects were already popular pre-COVID, but the pandemic only highlighted the need for these leisure-themed residential enclaves. Among the developers with leisure-centric properties outside Metro Manila are Brittany Corp., DMCI Homes, Inc., Rockwell Land, Inc., Megaworld Corp., Ayala Land, Inc., Robinsons Land Corp., Cebu Landmasters, Inc., Torre Lorenzo Development Corp., AboitizLand, Inc., Costa del Hamilo, Inc., Landco, Inc., and Damosa Land, Inc., with projects located in Cebu, Davao, Bohol, Palawan, Cavite, and Batangas. These projects remain popular, and Colliers encourages developers to further assess launching similar projects.

COLLIERS SURVEY RESULTS POINT TO THRIVING POPULARITY

A recent Colliers webinar poll showed that Palawan was the most preferred destination of our respondents (45%), followed by Boracay (17%) and Cebu (16%). Both Palawan and Boracay have been awarded as the third and fourth best islands to travel to, according to the Travel + Leisure Luxury Awards Asia Pacific 2024.

Colliers believes that hotel operators should remain active in capturing demand from domestic tourists who are enticed by impulse travel, as well as foreign visitors. Property firms should explore building either hotels or leisure-centric residential enclaves in popular destinations across the Philippines. Among the developers with leisure presence in Palawan are Brittany Corp., Megaworld Corp., Ayala Land, and Sta. Lucia Land.

Meanwhile, among the developers with resort-themed developments in Boracay, Cebu, and Davao are Brittany Corp., Robinsons Land Corp., Rockwell Land, Torre Lorenzo Development Corp., AppleOne Properties, Inc., Ayala Land, Damosa Land, Inc., and Cebu Landmasters.

Colliers believes that the leisure sector will also likely benefit from the new and upcoming public infrastructure projects of the government. The modernization and expansion of airports such as Panglao, Laguindingan, Zamboanga, Ninoy Aquino International Airport (NAIA), and the New Manila International Airport, as well as the development of new roads to emerging tourist destinations, will likely entice more long-haul and high-spending tourists. This should also support the Department of Tourism’s goal of attaining 7.7 million foreign arrivals in 2024 and 12 million in 2028.

Results of our Q2 2024 Residential Survey showed that about 28% of our respondents chose beachfront properties as their next residential investment. Developers have been taking advantage of the rising demand for resort or leisure-oriented properties outside Metro Manila. In our view, these projects will likely remain popular, especially among investors looking for greener and more open spaces. Colliers data showed that these projects have take-up rates of between 40% and 100%, with average prices per square meter ranging from P214,000 to as much as P590,000 ($3,800 to $10,500) as of end-2023.

Among the developers offering resort-themed developments are Brittany Corp., Ayala Land, Rockwell Land, Robinsons Land, Torre Lorenzo Development Corp., Sta. Lucia Land, and DMCI Homes, dispersed across Batangas, Cavite, and Cebu. In our view, the recovery of the country’s travel and tourism sector will also likely lift the demand for these projects.

PHL HOSPITALITY AND FOSTERING INCLUSIVE GROWTH

Colliers believes that public-private partnerships should not just focus on infrastructure development. Greater emphasis should also be provided in propping up the tourism sector and in making sure that it benefits all stakeholders — from hotel owners and operators to retailers of souvenir items. Over the past few years, we have seen the expansion and modernization of airports in Clark and Cebu, and there will be more in the pipeline — New Manila International Airport in Bulacan and the rehabilitation and expansion of the existing NAIA. With tourism as one of the major job-generating sectors of the Philippine economy, there’s so much on the line. That’s why greater public and private participation is needed in buoying the sector, ensuring that public projects are completed as scheduled, and promoting sustainable and inclusive economic growth across the Philippines.

Further growth of Philippine tourism is a win-win for developers and property investors.

Source: Business World

May building permit approvals decline

Approved building permits fell 15.4% in May, a turnaround from the year-earlier 8% growth, the Philippine Statistics Authority (PSA) said in a report.

Citing preliminary data, building projects covered by the permits numbered 12,888 in May, down from 15,234 a year earlier.

In May, building projects covered 3.15 million square meters of floor area, down 13.5% year on year.

Construction projects that received approval were valued at P39.32 billion, down 6.5% from a year earlier.

Permits for residential projects, accounting for 63.4% of the total, fell 20.1% to 8,165.

These projects were valued at P20.14 billion, compared with P18.77 billion a year earlier.

Single homes accounted for 87.1% of the residential category, with approved permits declining 23.3% to 7,112.

Permits for apartment buildings totaled 958, up 14.9% from May 2023, while permits for duplex or quadruplex homes tallied 79, down 19.4%.

Nonresidential projects fell 7.7% year on year to 3,017 permits, accounting for 23.4% of the total.

Nonresidential permits were valued at P15.04 billion, declining 28.3% from a year earlier.

Approved commercial construction applications made up 67.8% of all nonresidential projects, and were down 10.2% at 2,045. 

Institutional building permits rose 8.3% to 547, while industrial permits fell 7.7% to 240.

Approved agricultural projects in May 2024 fell 18.2% to 108 while other nonresidential projects fell 18.1% to 77.

Alteration and repair permits totaled 1,063, down 8% from a year earlier. They were valued at P3.61 billion.

On the other hand, permits for additions, or construction that increases the height or area of an existing building, grew 7.9% to 643 approvals.

Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon) had the most approved construction projects, accounting for 25.9% of the total with 3,341 permits, followed by Central Luzon (1,846 permits), and Central Visayas (1,445 permits).

The PSA said construction statistics are compiled from the copies of original application forms of approved building permits as well as from demolition and fencing permits collected monthly by the agency’s field personnel from the offices of local building officials nationwide.

Source: Business World

More investments in infrastructure development needed to ensure growth

More investments in infrastructure assets are needed to unlock faster growth rates for emerging Asian economies like the Philippines, S&P Global said.

“A marked improvement in infrastructure and logistics will support the next leg of growth for the emerging markets of Asia,” it said in a report.

“Economies can unlock higher growth rates through accelerated investment in infrastructure assets on top of infrastructure efficiency gains.”

S&P Global said that efficient and improved infrastructure will underpin robust growth in emerging Asia-Pacific, excluding China.

If infrastructure projects are accelerated, it said the Asia-Pacific region can nearly double its economy to $11.4 trillion by 2033 from $6.6 trillion in 2023.

“This translates to an annual real growth rate of about 5.5%. Our baseline forecast incorporates improved infrastructure as a cornerstone supporting these strong growth outcomes,” S&P Global said.

In the region, several governments, such as the Philippines, Indonesia, India, Malaysia and Vietnam, are prioritizing infrastructure development in their policies and reforms.

“The National Economic and Development Authority (NEDA) coordinates flagship infrastructure projects such as a new airport in Manila, a heavy rail project linking ports in Subic, Manila, and Batangas, and several highway projects,” it said.

Infrastructure is one of the Marcos administration’s priority investment areas. The NEDA Board has so far approved 185 infrastructure flagship projects with a total value of P9.5 trillion.

The flagship projects cover physical and digital connectivity, water resources, agriculture, health and energy, among others.

The government targets to spend 5-6% of gross domestic product (GDP) on infrastructure annually.

Latest data from the Budget department showed that infrastructure spending jumped by 18.2% to P335.7 billion as of end-April.

Meanwhile, S&P Global said the public sector usually undertakes more infrastructure projects, since the return on investments are spread over two or more decades “meaning duration risk for the private sector is high.”

Infrastructure operators may also find it difficult to turn a profit on these projects, putting more onus on the public sector.

“This does not rule out a role for the private sector. The private sector favors bottom lines and is hence better at innovating and can typically operate faster and more efficiently.”

“Private capital can ease the capital outlay burden on cash-strapped governments already committed to wide-ranging spending priorities. Still, the durations, regulated rates of return, and other project risks mean that the public sector dominates the space.”

S&P Global noted that the region’s public assets relative to economic size “have not been deepening significantly.”

It said that public fixed-investment assets are “relatively low” in the Philippines and Indonesia.

“However, in the Philippines and Indonesia public-private partnership (PPP) capital assets are higher than global averages. In the Philippines they are about 6.7% of GDP; in Indonesia it is about 4.2% of GDP, which would add to the available total public assets,” it added.

The government has also been pushing for more PPP projects. In December, President Ferdinand R. Marcos, Jr. signed the PPP Code, which seeks to streamline the framework for PPPs.

S&P Global said that the logistics sector has shown improvements in recent years.

“India and the Philippines have seen the largest improvement since 2014 whereas Vietnam, Thailand, and Malaysia saw more modest improvements. In Indonesia, the logistics performance score declined marginally.”

Antonio A. Ligon, a law and business professor at De La Salle University in Manila, noted that the government is “doing its best” to implement the necessary reforms to attract investments in infrastructure.

“However, the implementation of these measures must be strengthened. For example, an efficient implementation of the ease of doing business (and) effective marketing showcasing areas where infrastructures development can be done,” he said in a Viber message.

Nigel Paul C. Villarete, senior adviser on PPP at the technical advisory group Libra Konsult, Inc., said local government units (LGUs) must increase support to fast-track infrastructure projects.

“Oftentimes the National Government (NG) machinery is somewhat cumbersome rolling our projects,” he said in a Viber message. “Many of the upcoming projects may be achieved through PPP with the LGUs.  This will also free up the NG to just deal with the major ones.”

Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch PH, said that infrastructure investments “have always provided a backdrop for economic growth in other areas of the economy.”

“New routes will have faster travel times, and economic efficiencies such as lower fuel costs may translate to lower prices of goods,” he said via e-mail.

“Resolving the traffic gridlock, whether through better and more railways or more efficient transport systems, allows commuters to spend more time doing other productive or economy-impactful activities instead of being stuck in traffic,” he added.

POWER

In a separate report, S&P Global also noted the need to increase investments in the power sector amid expectations of more demand.

“Power demand over 2024-2025 will grow 5-7% in India, Indonesia, and the Philippines, (and) about 3% in Singapore, Malaysia and Thailand.”

S&P Global said that increasing investments for the energy transition will “keep capital expenditures and leverage elevated.”

“Moderating fuel costs provide some relief to lagging generation and distribution firms,” it added.

In his State of the Nation Address on Monday, Mr. Marcos said that he expects the country’s power supply to “increase at a steady pace to meet our growing demand in the next few years.”

“Nonetheless, we are continuously diagnosing and urgently addressing power shortages, as well as the systemic causes of blackouts in unserved and underserved areas,” he added.

The government is aiming to increase the share of renewable energy in the country’s power mix to 35% by 2030 and 50% by 2040.

Source: Business World