With the advent of real estate investment trusts (REITs) in the Philippines, it’s now increasingly important to examine the Philippines’ top real estate investment prospects… and whether they live up to their potential for investors.
The REIT is a new asset class (akin to stocks), representing shares of property investments that can be traded on an exchange. This allows Filipinos to own a stake in high-value real estate assets in the country, without buying the assets themselves.
On February 2020, Ayala Land’s subsidiary AREIT, Inc. applied to set up an REIT, with an initial portfolio of Makati CBD Grade A office assets.
One might assume that Metro Manila is where all the investment action is. In the immediate future, sure: according to a new report from the Philippines’ Urban Land Institute (ULI), Manila is the 17th best real estate investment prospect for 2020. Commercial business districts (CBDs) in Manila, such as Makati City and Bonifacio Global City (BGC), remain the top real estate investment prospects for the year.
However, property developers are also setting their sights on locations outside of Manila. This move not only helps decentralize and decongest the nation’s capital, it also helps put the spotlight on other locations that are poised for further growth.
Thanks to big-ticket infrastructure projects and other industrial activities, you can expect future REITs to seed their portfolios with properties from the following places.
This province down south, dubbed “the Makati of the South” thanks to its short distance from Metro Manila, is now a hotspot for property developers. Homebuyers looking for their first or second home gravitate towards Laguna since it straddles the bustle of urban life and the calmness of rural living. While it remains easily accessible to Manila, Laguna is also a gateway to other weekend destinations, such as Tagaytay and Batangas.
Business process outsourcing and information technology (BPO-IT) companies have also set up satellite offices in Laguna, which not only contributes to the local economy, but also ramps up demand for real estate. Emerging real estate locations in Laguna include Sta. Rosa, Calamba, San Pablo, Liliw, Nagcarlan, and Majayjay.
Known as “the Gateway of the North”, Bulacan is the first province you’ll see as you head down the North Luzon Expressway (NLEX). This proximity to Manila has made Bulacan an attractive location for real estate developers.
Beyond the proximity, however, Bulacan remains an attractive option for real estate investment due to its growing economy, population, and infrastructure developments. Areas such as the municipalities of Pulilan and Bulakan, and the cities of San Jose del Monte and Malolos are headlining the real estate growth in Bulacan.
Cavite boasts of reasonably priced real estate properties and has the makings of a commercial business district (CBD). There is a wealth of career opportunities courtesy of BPO-IT companies, multinational corporations, and other industrial locators. Major malls, supermarkets, and other commercial establishments are also easily accessible. And it is also close to the beaches and resort places of Batangas, Laguna, and Quezon Province.
Major infrastructure developments, such as the Manila-Cavite Expressway (CAVITEX), the C5-CAVITEX Interchange, and the Cavite-Laguna Expressway (CALAX), have also made Cavite easily accessible to motorists and commuters, cutting travel time and providing alternate routes.
While it is famous for its kapeng barako, its beaches and diving hotspots, Batangas also continues to be a major manufacturing and shipping center. As a neighborhood, it provides the peace of mind of countryside living within relatively close proximity to Manila, which can help address the huge housing backlog for an expanding middle-class market.
While Batangas currently boasts of affordable real estate properties, these are considered high-value properties that will gain high appreciation in the coming years. Thanks to a comprehensive development plan, which covers education, health, housing, and economic growth, Batangas is poised for further growth in the next 10 years.
Mindanao’s main trade, commerce, and industry hub has big plans for the immediate future. Growth in the manufacturing and services sectors have bolstered the city’s strengths as an agricultural and fisheries hub; Davao earned some P286 billion worth of investments in 2019, up from 2018’s P279 billion.
The upward trend is seen to continue, due in part to an influx of infrastructure projects: the P19.8 billion Davao City Coastal Bypass Road, the Mindanao Railway, and the Davao Airport redevelopment project, among others.
With robust growth forecast over the next few years, the demand for quality housing has grown apace. With space at a premium in the city center, developers have built upwards in areas like C. M. Recto Avenue and Bajada—offering a wider selection for Davao City’s up and coming homeowners.
This province north of Manila has the next few years all mapped out, thanks to a “Pampanga Megalopolis plan” that ensures both rapid economic growth and equitable distribution of its benefits among Pampanga’s 22 identified towns.
In the near future, access to this strategically-located province will also be improved by ongoing infrastructure projects, like the Subic–Clark–Tarlac Expressway (SCTEX); New Clark City; the redevelopment of the Clark International Airport, due to be completed by the end of 2020; and the North–South Commuter Railway (NSCR), whose northern route may be completed by 2023.
Expect a “Golden Triangle” of development in Pampanga to benefit from its leaders’ foresight and ongoing hard work. Robust demand will be met by thriving developments in towns like Angeles, Porac and San Fernando.
Cagayan de Oro
Known as “the Gateway to Northern Mindanao”, Cagayan de Oro remains one of the most accessible cities in Mindanao due to its proximity to international land and sea transportation. It is fast becoming a favorite location among property developers, especially due to its continued economic growth.
Cagayan de Oro’s BPO-IT sector is one of the fastest-growing contributors to the city’s economic growth. It also has the hallmarks of a thriving commercial business district (CBD)—modern telecommunications facilities, affordable and reliable power supply, modern infrastructure, and urban lifestyle amenities, just to name a few. Since Cagayan de Oro is still a relatively small market, there is no risk of a real estate bubble yet.
Iloilo, known as “the Gateway to the Visayas,” is one of the fastest rising cities in the Philippines in terms of competitiveness and governance. Iloilo boasts of abundant natural resources and holds a firm position in commercial trading. The real estate market is currently adjusting to accommodate demand from foreign and domestic locators, so there remains plenty of room to develop office, residential, and commercial real estate in Iloilo.
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Investing in real estate is all about finding the right opportunities in the right locations. If you are interested in finding the best real estate investments outside of Metro Manila, you can ask for more recommendations at the Avida Land website.