Highly regarded real estate professionals share opinions on the current mixed-use township trend in the Philippines
As the Philippines’ major cities experience continued population growth and the amount of developable land remains finite, Filipinos may have noticed an increase in real estate projects designed to integrate residential, office, retail, and leisure spaces. More commonly called mixed-use townships (or live-work-play developments), these real estate projects, which can range in size from 10 to thousands of hectares, tick all the boxes when it comes to smart use of limited space in real estate.
Speaking as a moderator at the recently concluded 4th Asia Pacific Real Estate Investment Summit (APREIS) Philippines, noted architect and urban planner Felino Palafox Jr. essentially confirmed this ongoing occurrence in the country.
“By 2050, we will have 54 million more Filipinos, and 70 percent of them will go to the cities. So there’s no way to go but up,” Mr Palafox Jr. said.
What’s Driving Growth of Townships
Growing at a rate of around 10 percent annually in the past decade, the country’s business process outsourcing (BPO) sector has essentially served as one of the Philippines’ largest sources of private employment, and perhaps single-handedly has driven population growth in Metro Manila over the last decade.
But more than just a creator of employment opportunities, the BPO sector also plays an important role as initiator for business growth in whichever area it chooses to set up shop. According to Rick Santos, chairman of CBRE Philippines: “The BPO creates an ecosystem, where the commercial offices created for it act as a growth pull, bringing retail, gaming, and other BPOs into the area.”
Indeed, BPOs do not just provide work for those in the industry, but also additional employment in retail, public transportation, and other support services. In essence, the BPO industry also helps spur the development of mixed-use townships, as it makes more sense to put together in a single, self-contained area places where people live, shop, work, and play.
Townships Are Moving out of the City
Although expandable to an extent, a heavily built-up area of high-rises still cannot meet all the rising demand for space coming from BPOs, other businesses, and the residential populace. Unsurprisingly, real estate is becoming scarce in highly urbanized centers, translating into very expensive land values. As costs for both buying and renting increase, developers are now leaning toward establishing townships outside the typical central business districts (CBDs).
Maria Socorro Argon-Gobio, Senior Vice-President for Robinsons Land Corporation, explained why mixed-use developments have moved out of the city center: “The motive for mixed-use concepts is [moving] outside the CBDs. [This is called] de-centralization. We see this even in Hong Kong, which is known as a CBD-concentrated place. But they have to do it, because not everyone can afford to be located in the CBD.”
The Philippine government, for its part, has already begun taking the rising population and prices into consideration through the Next Wave Cities initiative, where the aim is to offset rapid urbanization by creating more business hubs outside the already established metropolitan areas, and reducing Metro Manila’s domestic share of the BPO sector by about 10 percent.
Of course, taking townships outside the major CBDs is not just intended to make acquiring space affordable for BPOs and other offices, but also to make real estate acquisition affordable for residents and the developers themselves. More space is therefore available in less developed areas, and it is more affordable. However, there is another significant benefit to establishing townships in newer areas.
According to Sigrid Zialcita, Managing Director of Research Services at Cushman & Wakefield: “Mixed-use projects, as opposed to standalone projects that are set all over the busier metropolis, are advantageous because a single location with sustained critical mass gives developers a better opportunity in managing the developments from the construction phase, through project management, all the way to the operational phase.”
This makes townships far from the CBDs also ideal for residents. With a collection of offices, retail establishments, and service providers all situated in one place, home-seekers can have a centralized lifestyle where everything they need to do and places they need to be are conveniently clumped together. From a price standpoint, while a condo unit in a newly developed CBD is still relatively pricy, for the time being at least it is still more affordable than space in the already established CBDs.
Townships can eventually establish themselves as business districts, which of course would bode well for the local and national economy. The classic example of this is simply Bonifacio Global City in Taguig, which grew from an idle military base into one of Metro Manila’s most heavily built-up areas in just over a decade. It now rivals the Makati CBD and Ortigas Center in terms of being economic centers, even if it is not yet as established as the latter two.
What’s more, not all of townships will experience the exact same success, as it would also depend on what the overall concentration of each is. Some can be BPO hubs, others build more toward residences, and others attempt a combination of both.
Main photo via Shutterstock
