News article from Bworldonline.com by Franz Jonathan G. de la Fuente

The Bases Conversion and Development Authority (BCDA) is a development corporation that engages in public-private partnership to push forward public infrastructure as well as major real estate developments. BCDA is one the prime movers of national development in the Philippines, creating economic opportunities through its establishment of integrated developments, dynamic business centers and vibrant communities. Currently, BCDA has invited private sector parties to bid for three state-owned properties in Taguig, and Pasay, They are confident that these properties will be sold since the location and size strategically fit any envisioned residential, retail, and institutional site development. BCDA reports that a number of companies had already signified their interests.

In general, whether these sites will be used for residential, retail, or institutional site development by the companies who win the bid, a positive impact can be expected for Real Estate Industry. Moreover, using these sites for institutional site development will deliver the highest positive impact compared to residential and retail site developments. According to Colliers International Report on the Philippine Real Estate Market 1st Quarter of 2012, the supply for office spaces are narrow across Metro Manila. Take-up rates are expected to drop by 26% this year mainly because of the limited office space and negligible increase in supply. In addition, there is a strong demand for offices coming from the Owned-and-Operated station Industry. IT-related and BPO firms with immediate, sizable requirements have resorted to plug & play options for their desired offices.[1]

Considering the low supply and high demand for offices in Metro Manila, specifically for above Grade B and plug & play offices, these sites offered by BCDA should be used for institutional offices development to deliver the optimal positive impact. Aside from being able to satisfy the demands for these types of offices, a positive growth in the Owned-and-operate industry as well as in the Real Estate Industry may be expected.


[1] Karlo Pobre, “REASEARCH & FORECAST REPORT PHILIPPINE REAL ESTATE MARKET 1Q 2012.” Colliers International, July 18, 2012.

Authors:
Altuna, Gilleane
Sacbibit, Mary Grace
Villacorta, Charles
Chastity
7/20/2012 10:05:30 pm

Recently, firms belonging to the offshoring & outsourcing (O&O) industry dominate the demand for office spaces and I do believe that the industry supply is quite narrow for 1Q2012. However, have you looked at the vacancy rate of the buildings? I think it ranges from 1-20% ---- the situation isn't so bad at all.

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Villacorta, Charles
7/21/2012 02:22:33 am

Vacancy rate in Makati CBD as of 1Q2012 is around 4%. This is mainly because of the high supply of Grabe B offices which are not exactly the demand of the market right now, especially for the O&O industry. Indeed the Real Estate industry is not in a bad situation, that is why we can expect a positive impact whichever companies win the bid. Yet, out of the three aspects (office, residential, retail) on which these properties can be used, development on suitable prime/Grade A offices are more preferred.

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Chastity
7/21/2012 11:38:30 pm

I appreciate the way you used numbers in your reply. As mentioned, the vacancy rate in Makati fell to 3.43 percent (1Q2012) from around 4.5 percent (4Q2011). However, Makati isn't the only business district in Manila. Your research should encompass most, if not all, of the business districts in the country (for example Alabang, Quezon City, BGC, and Cebu). Doing so will give you a grasp of the state of competition (somehow 'cause eventually you'll be taught to compute it through the HHI) in and out of the business districts. I'm not an expert (I'm also a rookie--- just 6 days old) but I think you should narrow down your research through identifying which market would you like to venture in (office, retail, residential, industrial). Also, since you are still setting your foot, I would suggest that you focus more on the linkages of the industry to the rest of the economy or focus on the macro side first. Just saying. :)

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Villacorta, Charles
7/21/2012 11:55:00 pm

Thank you for the insight, I'll make sure to keep that in mind for my future analyses.

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