Shifting Orbits the Rise of Satellite Communities
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Colliers Radar Philippines | Research 29 June 2017 Shifting Orbits The Rise of Satellite Communities Colliers expects developers to continue pursuing master- planned communities as these offer a better value proposition than standalone projects. We believe that the emergence of millennial workers, who account for about 40% of the country’s labor force and are primarily employed in BPOs, will sustain the demand for integrated live-work-play environment. The concept of building offices, condominiums, malls, schools and hospitals within one community satisfies the millennials’ demand for greater mobility and convenience. By Joey Roi Bondoc Colliers sees developers pursuing more integrated Manager | Research communities outside of Metro Manila such as Cavite, [email protected] Laguna, Bulacan, and Pampanga over the near- to medium-term as land values are unlocked by an aggressive expansion of road networks. We are confident The government’s failure to adequately that this will be sustained by the government’s push to generate economic opportunities in the countryside address issues plaguing Metro Manila anchored on its commitment to usher in the ‘golden age of such as worsening traffic, flooding, and infrastructure.’ poor mass transportation systems has compelled private firms to take the lead in Selected Townships across Metro Manila developing master-planned communities that integrate the live-work-play lifestyle. The expansion of economic activities in the country’s capital has also buoyed demand for integrated communities. To further unlock opportunities, we recommend that developers: Distinguish their projects from others by allocating land for education, healthcare, entertainment and recreational uses; Intensify efforts in terms of strategic landbanking; Explore the option of acquiring Source: Colliers International Philippines reclaimed land; Redevelop brownfield properties; and Build flexible office space to accommodate non-business process outsourcing (BPO) occupants. Contents The problems of Metro Manila ....................... 4 Eastwood City: Clothing to outsourcing ......... 5 Rockwell Center: Mothballed thermal to sprawling residential ...................................... 5 Century City: CBD in Makati periphery .......... 6 Capitol Commons: Capitalizing on Ortigas Fringe ............................................................ 6 Vertis: Northern Metro Manila’s Emerging CBD……………………………………………..7 Arca: Southern gateway to Manila ................. 7 Circuit: Makati’s new entertainment hub ........ 8 Aseana City: Reclaimed BPO and tourism hub .................................................. 8 Bridgetowne and ArcoVia: From industrial property to integrated community .................. 9 Conclusion and Recommendations ............... 9 3 Colliers Radar | 29 June 2017 | Research | Colliers International Status of Metro Manila townships Office (sq m) Residential (unit) Retail (sq m) Hotel (unit) Township Institutional Entertainment (Land Area) Total Total Total Total (sq m) (sq m) Completed Completed Completed Completed Planned Planned Planned Planned GLA Units GLA Units GLA Units GLA Units Eastwood City (18.5 ha) 352,500 320,100 9,700 7,600 25,000 25,000 90 90 1,300 - Rockwell Center (15.5 ha) 62,000 62,000 5,900 4,200 51,000 45,000 400 114 3,600 - Century City 93,800 - 3,800 3,500 17,000 17,000 - - 1,400 - (3.4 ha) Capitol Commons (10 ha) 32,900 19,200 2,000 - 55,000 30,000 - - - - Vertis North 120,200 - 4,200 - 47,000 9,000 440 300 11,100 - (29 ha) Arca South 200,000 - 2,400 - 103,000 - 270 - 1,500 - (74 ha) Circuit Makati 72,100 - 1,300 - 69,000 11,000 250 - - 31,300 (21 ha) Aseana City 131,800 42,300 1,700 - 257,000 25,000 3,850 1,620 160,400 33,400 (107 ha) Bridgetowne 127,800 22,700 - - 17,000 - - - - - (8 ha) Source: Colliers International Philippines Research Figures are rounded off surrounded by upscale facilities, spacious open area, The problems of Metro Manila green surroundings and energy-efficient infrastructure – Several socio-economic issues plaguing Metro Manila all done by private developer-led master planning. In remain unresolved. The lack of economic opportunities these communities, integration prevails over seclusion in the countryside is pushing people to migrate to the as the middle-class family upgrades to condominiums country’s capital, exacerbating Metro Manila’s unabated from house and lots. population growth. Poor public transportation systems coupled with congested traffic make for a gruelling daily The rising demand for these integrated developments as commute for the workforce. well as soaring land values in central business districts (CBDs) have provided the opportunity for developers to These issues continue to constrain Metro Manila from transform idle properties on the outskirts of CBDs into achieving its full growth potential. Developers are masterplanned communities. Eastwood City is the bridging infrastructure gaps and unlocking opportunities former site of a textile mills; a thermal power plant used by building master-planned communities that have the to occupy a portion of Rockwell Center; Century City is potential to become major catchment areas for business the former site of International School-Manila; while activities in the country’s capital. Capitol Commons is a redevelopment of the former capitol of Rizal Province. The expansion of business opportunities in Metro Manila has been fuelled by the influx of multinational Rising demand and land prices are also enticing outsourcing companies. The fast-evolving demands of industrial property owners in strategic locations to the capital’s workforce and households play a crucial liquidate land holdings in favor of mixed-use township role in driving a shift in the mindset and strategies of real developments. Examples of these are the upcoming estate developers. Property firms saw the need to add projects along C-5 Road such as Megaworld’s ArcoVia value to the usual standalone building. Market demands City and Robinsons Land’s Bridgetowne. The strategic dictate that they build malls, residential condominiums, location unlocks the potential of these former industrial and institutional facilities such as schools and hospitals properties for more profitable uses. alongside offices. Metro Manila residents’ rising disposable incomes have enhanced their standards of The national and local governments’ thrust of raising living and reinforced their demand for “convenience, non-tax revenues has compelled a number of agencies accessibility, and exclusivity” – features only a master- to put large land parcels out to tender to major property planned community could provide. They now prefer to developers. These properties are now being transformed live, work, dine, and shop in a single community into satellite communities that offer specific value propositions: Vertis North is being positioned as the new 4 Colliers Radar | 29 June 2017 | Research | Colliers International CBD of Northern Metro Manila; Makati Circuit is being hundred companies. Its occupants include some of the groomed as the next entertainment hub while Arca South biggest BPO and KPO firms in the country such as is poised to serve as the Southern gateway to the Accenture, Citibank, and IBM. country’s capital. Rockwell Center: Mothballed Developers are also building townships outside of Metro Manila. We attribute this to the construction of railways thermal to sprawling residential and roads in key areas outside of the country’s capital which unlock values for properties that could be developed into mixed-use communities. We believe that the sprawl into urban areas such as Cavite, Laguna, Bulacan, and Pampanga was also necessary in capturing a large fraction of the available labor pool that BPO and industrial tenants could tap. The surge in residents’ purchasing power encouraged developers to build malls and recreational facilities alongside office and residential condominium buildings. The entertainment facilities also make these townships an attractive weekend destination for Metro Manila residents. These developments should be sustained by institutional facilities such as schools and hospitals. Colliers believes that the Duterte administration’s decentralization thrust Source: Rockwell Land anchored on the implementation of major public infrastructure projects should entice developers to Rockwell Land was established in 1995 to develop the aggressively pursue master-planned communities 15.5-hectare area occupied by a decommissioned outside of Metro Manila. thermal power facility. The property was transformed into one of the premium locations for residential development in Metro Manila. The community’s high-end residential Eastwood City: Clothing to condominium buildings include Hidalgo Place, Rizal outsourcing Tower, Amorsolo Square and Luna Gardens. At present, these properties’ occupancies hover between 90% and 95% despite being offered to the market in the early 2000’s. Nine residential buildings have been completed since 1999 offering some 4,100 units. The Carlos Ott- designed The Proscenium features five residential towers that will offer an additional 1,600 units. The towers are due to be completed from 2018 to 2021 but are already 86% sold as of 1Q 2017. The 40,000 sq m (430,000 sq ft) Power Plant mall was completed in 2000. The mall has gone through a number of renovations to keep pace with the fast-evolving preferences of consumers. Its 6,000 sq m (64,560 sq ft) expansion will be completed by September 2017. Source: Megaworld Rockwell is also building