Property demand prompts more reclamation projects

There’s a potential for reclamation, and for the longest time people were looking for reclamation.

The increasing property demand in Metro Manila is expected to prompt more land reclamation as developers seek additional land in a rush to accommodate the growing real estate market.

Property consultancy firm Jones Lang LaSalle Philippines’ director for research and consultancy Janlo de los Reyes said there’s a “huge potential” for developers to pursue artificial land bank expansion in the face of the growing demand in the metropolis, buoyed primarily by two industries competing for space: IT-BPM and POGO.

Reclamation is seen as a solution to decongest the already dense capital as well as nearby cities. But while the process provides more room for infrastructure and theoretically support economic growth, among its widely-studied effects include environmental and disaster risks, further highlighting the vulnerability of coastal cities.

“There’s a potential for reclamation, and for the longest time people were looking for reclamation. Definitely there are parties also proposing it,” De los Reyes said in an interview on Friday.

“I think it’s a matter of how do we go about reclamation. If it’s done responsibly using sustainable techniques and also technology that is not really disruptive to the environment then it does make sense, because it does create more land which we kind of lack,” De los Reyes said.

Although the country has been seeing telltale signs of slowing growth in the IT-BPM industry due to several headwinds, De los Reyes in a market outlook presentation said the fast-rising offshore gaming industry is still picking up pace despite the government crackdown on Philippine Offshore Gaming Operators (POGO).

In a separate report, property consultant Leechiu said office take up in the Philippines for the first nine months alone stood at 1 million square meters (sqm), with Metro Manila accounting for 990,000 sqm of the total. By industry, POGO accounted for 34 percent of the total office demand at 386,000 sqm, outpacing the IT-BPM sector’s 355,000 sqm.

For the office market alone, Leechiu sees an additional supply of 5.16 million sqm in the next five years, or 39 percent more from the current level. Leechiu’s report noted that vacancy rate in the Bay City and Alabang are already the lowest at one percent.

Additionally, Bonifacio Global City and Alabang are seen to have low supply of buildings by 2021, with record high office rental rates expected across the districts.