Condotel investment opportunity analysis

Background
(A Mangga Properties market analysis)

Since 2007, the Philippines has enjoyed steady growth year on year from 4.6% in 2007 through to over 6% now. In the last 4 years GDP growth has averaged over 6%. In the same period since 2007 inward investment has doubled to 4.88 billion dollars. Colliers International recently listed the Philippines as second in the world for business process outsourcing (BPO) with Manila the 8th placed city in Asian for business.

Customer service and IT industries are leading the way, examples of companies outsourcing to the Philippines include Accenture, Reuters, Logica, HP, United Health Group. The high academic levels of many Filipinos and the quality of English spoken makes the Philippines the preferred world location for English language call centre outsourcing.

Bloomberg are predicting growth averaging over 7% for the next 2 years, boosted by lower worldwide fuel prices (the Philippines are a net importer of fuel). The Philippines has a ‘positive’ outlook amongst credit rating agencies such as Moody’s Standard and Poors.

On the tourism side the Philippines continues to be a steadily developing and growing holiday destination. Japanese, Korean and Chinese tourism and migration has been steadily increasing and investment into the Philippines property market is significant (e.g. a Chinese investor recently purchased 20 condominium units off plan in Manila for short let business).

Boracay is the most popular holiday destination. It is expected that with the Megaworld Newcoast township development on the east coast of Boracay that this will significantly boost tourism to the island. Outside of locals, Korea provides the largest number of tourists to Boracay. Palawan is widely recognised as a renowned holiday location for it’s natural environment (amongst many awards, named best island in the World in Conde Nast Traveler’s Readers Choice 2014).

Flight access into the Philippines is good from Far East locations and improving from Europe. There are scheduled direct flight from Heathrow to Manila also most carriers prefer to route via hubs such as Kuala Lumpur.

Property outlook in the Philippines is tightly coupled to the economic factors that prevail, and as all the indicators are strongly positive the inward investment into infrastructure projects including urban re-generation and township development has seen companies like Megaworld achieve solid double digit growth figures.

Property prices have increase at a steady rate of around 6% annually for the past 5 years. In high value areas of Manila such as Makati these prices have risen at a faster rate, meeting the needs of a high earning and professional business community.

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