This is the gist of JLL’s findings which drilled down on the key themes and factors affecting investments in several Southeast Asian cities, including the Philippines.

Faster Economic Growth But Weaker Currencies

Based on their study, SEA markets generally experienced faster economic growth, expanding by 5.2% year-on-year (yoy) in the 1st half of 2018, prompting positive forecasts in the Gross Domestic Product (GDP) for Thailand, Malaysia and Singapore. However, the risk of capital outflows weighed on certain emerging Southeast Asia currencies, particularly the Indonesian Rupiah and the Philippine Peso. It is for this reason that JLL expects investors to focus on the more developed markets of Singapore, Malaysia and Thailand for the short term. 

Elections Matter
Elections also impact on investors’ decision on which property market to tap. For instance, many investors are buoyed by Malaysia’s surprise election results in May which saw the removal of goods and services tax that should boost retail sales. However, upcoming elections in Indonesia and Thailand in 2019 may move some investors to defer their investment decisions.

Thailand’s Eastern Economic Corridor (EEC)
The Thai government announced a five-year plan with infrastructure spending of about USD 45 billion and tax incentives to attract advanced industries and logistics operators. 
Thailand’s growth numbers is also expected to improve by 2020 as the planned EEC project is well placed to link up with China’s Belt and Road Initiative.

Philippines E-commerce operators continue to expand, set up physical stores in Southeast Asia
In the Philippines, E-commerce operator Lazada is set to extend its 30,000 sqm plant in Cabuyao, Laguna to 60,000 sqm in 2018.  Zalora is targeting to move to a warehouse facility in Cavite that can accommodate five million product inventory, five times the capacity of its existing warehouse. It has also recently launched pop-up stores in Ayala Malls to better cater to their customers.

Strong tourist arrivals to boost hotel investments
Tourist arrivals surged across Southeast Asia, growing 9% yoy upsurge has ignited investors’ interests in hotel and leisure developments.

Office take-up continues to rise particularly in Manila, Singapore and Jakarta
Office take-up in Southeast Asia continues to accelerate, rising to 7% yoy in 1H18 as technology, e-commerce and co-working companies expand. The biggest upside surprise in 2Q18 was the strong office take-up in Manila, where net absorption increased by 222,000 sqm in 2Q18, with stronger demand from Outsourcing and Offshoring companies, online gaming operators and business services firms in travel, marketing and IT. Despite the record volume of office completions in 2018, vacancy rate has stayed at 2.2%% in 2Q18 as occupancy of the new buildings was stronger than expected.

The flexible space sector in Southeast Asia is also expanding rapidly in line with growth in Asia Pacific, which grew at a compound annual rate of 35.7% in the last five years. In Singapore, flexible space already takes up 2.8% of office areas after being deemed to be just as cost-effective as traditional office space.  In Jakarta, flexible work space is estimated to take up about 2% of occupied office space. JLL expects co-working and serviced offices to take up 10-15% of occupied office space in 2030.

JLL’s Key Views for the Future
JLL has upgraded Singapore CBD office rent and capital value forecasts for 2019, as the potential redevelopment and retrofitting of aging stock could boost occupancy. Prime retail rents expanded in Singapore for the first time in four years and they expect retail rents to rise 0.5-1.0% p.a. for the next four years. Jakarta, meanwhile, expects office rents to fall by another 2-3% in 2H2018 before recovering in 2019. For Kuala Lumpur, JLL raised their office rent forecasts for its fringe areas due to strong demand, but downgraded their forecasts for KL City Centre due to significant supply. Meanwhile, majority of investment activities continue to focus on land acquisitions coming from local developers. Regarded as  one of the significant transactions is the acquisition of a 16-hectare site in Manila Bay’s entertainment city by Bloomberg resorts for US$709 million.

Overall, Southeast Asia’s economies grew faster overall in the first half of 2018. While the speed of economic growth for each country in the region varies depending on factors such as currency strength, inflation, government policy, elections, and tourism, JLL’s Head of Research and Consultancy Janlo de los Reyes says he remains confident that investor interest in office take-up in Southeast Asia will stay resilient in the coming years.

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IDC is now ready to replicate its CDO success in Sto. Tomas, Batangas with Miramonti Green Residences, the first mixed-use condominium project in this area with commercial offices and serviced apartments. According to IDC Chairman and CEO Romolo V. Nati, Batangas is ripe for a project such as this. “As a first-class municipality, Sto. Tomas is part of the Philippines’ new beltway of economic growth. Its location is very strategic too, being along the expressways connecting the capital region with Batangas port.”

Miramonti Green Residences offer efficient, affordable and functional contemporary Italian architectural design within short distance of the Light Industry Science Park (LISP) III. This makes the property very accessible to industrial parks such as the Filinvest Technology Park Calamba, Carmelray Industrial Parks, Calamba Premiere Industrial Park and Lima Technology Center, as well as schools, offices, commercial centers and golf courses. The project is targeted towards businessmen, entrepreneurs and OFWs looking to invest and those who work inside LISP III and its neighboring industrial parks, including foreign nationals.

IDC President Jose D. Leviste III also shares that as Italpinas Development Corporation is known for its eco-friendly mixed-use buildings with top class yet affordable units, they will be tapping the marketing services of JLL to ensure that those who will benefit the most from investing in Miramonti will be reached. JLL is a leading professional services firm that specializes in real estate and investment management.

“We always tap a wide network of real estate brokers when we market our projects, and we believe we took that one step higher by partnering with JLL.” Leviste adds, “They have the experience, the network and the credibility that will complement this project successfully.”

For his part, JLL Philippines Country Head Christophe Vicic is very bullish on the potential of Miramonti. “At JLL, we’ve always believed the future of real estate lies in emerging sectors outside of Metro Manila. Miramonti is the perfect avenue to prove just that. There is so much business being conducted in this part of the country, and it’s the perfect time to develop a mixed-use condominium project that will reflect the investment value attraction of this area.”  

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About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and, on behalf of clients, managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $136 billion. At the end of the third quarter of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of over 80,000. As of September 30, 2017, LaSalle Investment Management had $59.0 billion of real estate under asset management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.

JLL has over 50 years of experience in Asia Pacific, with 36,900 employees operating in 96 offices in 16 countries across the region. The firm won the ‘World’s Best’ and ‘Best in Asia Pacific’ International Property Consultancy at the International Property Awards in 2016 and was named number one real estate investment advisory firm in Asia Pacific for the sixth consecutive year by Real Capital Analytics.  www.ap.jll.com.

About IDC

Italpinas Development Corporation (IDC) is a pro-environment, design-forward, multi-awarded real estate developer.  IDC brings knowledge and innovation in architectural design, market and demographic strategy, project development, and sales, to serve underestimated and unserved demand in the Philippines’ next wave of emerging cities. 

Italpinas Development Corporation’s innovation is not only in architecture and design but also in its sentience and reactivity to highly prospective demographic niches.    The premise of IDC’s business model is that certain 2nd and 3rd tier Philippine cities represent individual booms within the broader Philippine growth story, and that IDC’s unique design propositions are an unprecedented, but successful way to address such demand.  This premise was validated by IDC’s debut in Cagayan de Oro City.  The Company now plans to repeat this formula at other sites with similar demographic and market conditions, while remaining faithful to its core architectural and design philosophies of efficiency, elegance, and long term value. WWW.ITALPINAS.COM

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