Philippine Economic Zone Authority (PEZA)-registered office buildings, particularly those in Bonifacio Global City (BGC), remained in high demand despite the pandemic, according to Leechiu Property Consultants (LPC).
An article by BusinessWorld details LPC’s press release, which noted that PEZA-registered BGC buildings have a 4% vacancy rate, in contrast to buildings in other business districts with an 18% vacancy rate.
Henry Cabrera, executive director for Investment Sales at LPC, said that BGC currently has the largest number of multinational corporations in the country since many of these companies decided to relocate to newer facilities in Taguig, such as Ecoprime, from older buildings in Makati.
He noted that there are only two PEZA-accredited office buildings available in BGC at the moment that offer over 10,000 square meters of space, and that includes Ecoprime. He also said that BGC has more new office supply arriving in the coming years to meet rising demand.
PEZA-Registered Buildings Among Trends Shaping The Property Market
JLL Philippines recently released its Real Estate Market Overview for 2022 where it reveals the trends shaping the country’s real estate market this year. The report highlights the fact that the PEZA moratorium will play a key factor in leasing activity, particularly among IT-BPM firms, which are a significant driver of the office market.
The moratorium on new PEZA ecozones in Metro Manila was mandated by Administrative Order No. 18 proclaimed in June 2019 in a bid to encourage rural development. It urged IT-BPO firms to set up facilities in PEZA-accredited buildings in provincial areas, according to PhilStar.
Both PEZA and other real estate professionals are confident that the resumption of PEZA accreditation in the capital region will help the BPO sector recover, especially given the demand for expansion, particularly from IT-BPM companies. In the same way, data centers are seeking more physical spaces and are expected to spearhead economic growth in the country.
Charito Plaza, director of PEZA, told BusinessMirror that the agency has been diligently reiterating its request to lift the moratorium to the government, coupled with requests from IT-BPM and real estate companies, as well.
An industry source also says that if Metro Manila’s economy reaches optimum levels, only then can the economy in fringe areas grow faster, as well. At the moment, PEZA-accredited buildings in Metro Manila are at full capacity and most newer structures are not PEZA-accredited.
JLL Philippines predicts that the Retail Trade Localization Act will attract more capital for prospective retailers. Furthermore, the amendments to the Public Services Act and the Regional Comprehensive Economic Partnership will offer structural changes to the market, thus attracting more foreign investments.
Infrastructure, Investment Potential Driving Appetite for Property
BGC buildings are in high demand due to their size, ability to produce business opportunities, and the location’s proximity to infrastructure projects that significantly improve accessibility, such as the Santa Monica Lawton Bridge and the BGC-Ortigas Center Link Road.
These reasons are driving the appetite for commercial and residential property in other areas in central business districts, which is where most REIT properties are located. Other reasons include buyer attitude shifting towards more functional investments and proximity to mass transportation hubs, such as the Metro Manila Subway Project (MMSP).
In the meantime, PEZA continues to push for an end to the moratorium on the development of more ecozone developments in the National Capital Region (NCR), together with IT-BPO developers and LGUs that do not currently host an IT center.
PEZA says that there are currently over P16.7 billion worth of inquiries for the development of IT facilities in NCR alone. The agency believes that developing more ecozones is a way of supporting investments in the IT sector, which has remained stable during the course of the pandemic, as reported by ABS-CBN News.
Sources: BusinessWorld, JLL Philippines, PhilStar, BusinessMirror, ABS-CBN News