Infra drive seen competing with property industry for construction workers
CONSTRUCTION delays continue to be a problem in the real estate industry as the government’s aggressive infrastructure program competes with the industry for workers.
Nevertheless, international real estate consultancy Pronove Tai projected the supply of office space to hit a record 1.1 million square meters (sqm) in 2017. Total office inventory is projected at 9.6 million sqm.
The lack of skilled labor however remains the biggest problem for the construction industry, Pronove Tai Chief Executive Officer Monique Cornelio-Pronove said in a briefing on Monday. The government is looking to spend around P8.2 trillion in infrastructure projects over the presidential term.
“The real estate industry is plagued by construction delays, and this will continue as the government rolls out more infrastructure projects this year,” Ms. Cornelio-Pronove said.
“Lack of skilled labor in the construction industry will continue to pose challenges in the timely completion of building projects,” she added.
Only four out of 12 projected completions were delivered in the first quarter, while 40 out of 44 projected buildings will be completed by the end of the year, according to the firm’s quarterly report presented during the briefing.
The group’s report consolidated data from seven major office districts -- Makati, Taguig, Ortigas Center, Quezon City, Mandaluyong, Bay City in the Manila Bay reclamation area shared by Pasay and Parañaque, and Muntinlupa, as well as four minor office districts: San Juan, Pasig, Pasay, and Parañaque.
The consultancy said the construction industry is approaching the manpower problem by seeking to attract overseas Filipino workers (OFWs) back home, or recruiting labor from outside Metro Manila.
“Their own solution is they’ve been going to the provinces to attract labor, those people without jobs... during the Infrastructure Summit in January one of the solutions is also to attract overseas Filipinos back home,” Ms. Cornelio-Pronove said.
Other than labor challenges, Pronove Tai also pointed to delays in accreditation from the Philippine Economic Zone Authority (PEZA) as one of the problems in the industry.
Of the 44 projected building completions, 13 are PEZA-accredited, 20 are undergoing accreditation, while seven are non-PEZA buildings.
DEMAND FROM OFFSHORE GAMING
The primary drivers of office demand for the year are information technology-business process management (IT-BPM) industry and the offshore gaming industry, with IT-BPM holding the largest share of office demand at roughly 80%.
Ms. Cornelio-Pronove highlighted the growth of the offshore gaming industry in recent years, citing Philippine Amusement and Gaming Corp. data that the gaming industry grew by 700% from 2010 to 2014.
Online gaming operations lease office space at a minimum of 1,500 sqm to as much as 15,000 sqm, with three buildings in the Bay area already pre-leased by offshore gaming operators, according to Pronove Tai.
Demand from the industry stems from companies looking for office space for software development, Ms. Cornelio-Pronove explained.
With the Philippines as the only country in Asia that licenses online gaming, the industry is expected to continue its growth and generate at least P10 billion annually. In addition, the expansion of companies from gaming areas to more family-oriented entertainment centers is expected to boost their growth.
Ms. Cornelio-Pronove cited Resorts World Manila as an example, which aside from gaming, offers hotels, shopping, and cinemas, among others.
MAKATI STILL MOST EXPENSIVE
Based on the group’s report, Makati accounted for the largest office inventories in 2016 and will continue to do so this year, with a projected total stock of 3.2 million sqm. Taguig ranks second at two million sqm followed by Ortigas Center at 1.6 million sqm.
“Makati is still the largest office district, but Taguig will outpace Ortigas despite Ortigas being the older district,” Ms. Cornelio-Pronove said.
The firm reported a 9% increase in prices of office rentals in Makati, while the price of space in Taguig increased by 11%. Rates are highest in Makati, where the average is pegged at P1,260 per sqm, and will continue to rise due to limited new supply in 2017. -- Arra B. Francia