THE various cooling measures implemented in Malaysia of late have led local real estate agents to seek other options for those looking to invest in property. This has prompted overseas developers to seize the opportunity to market their products in Malaysia.
Among them is the Philippines-based Anchor Land Holdings Inc. This is not the company’s first foray into this region as it had previously marketed its projects in the more matured market of Singapore. The high-end developer is now setting its sights on Malaysian investors and plans to tap into other Southeast Asian as well as East Asian countries.
Anchor Land specialises in developing luxury residential condominiums. Listed on the Philippine Stock Exchange in 2007, it has completed seven projects and has nine that are ongoing.
The developer has engaged CBD Properties Sdn Bhd as exclusive marketing agent for its biggest residential project to date — Monarch Parksuites.
“CBD Properties is working in partnership with GPS Alliance group, the exclusive marketing agent in Singapore, Thailand, Myanmar and Indonesia for Anchor Land for Monarch Parksuites. This marks a new milestone for CBD, adding a feather in the cap, being our first foray into the Philippines,” says Linda Goh, director of CBD Properties.
According to Anchor Land president and director Elizabeth Ventura, the developer decided to market its products in Malaysia because of its dynamic and vibrant environment, and high potential for growth and profit.
“Kuala Lumpur has made a name for itself as a popular investment destination in Asia. We are confident that given good investment opportunities such as our projects, many Malaysians will see their potential right away and invest,” she says.
CBD Properties and Anchor Land are banking on the higher rental yields and more affordable prices in the Philippines, compared with Malaysia’s maturing market, to attract investors.
Making the case for Philippine properties
While a growing number of Malaysian investors have been investing abroad, they tend to flock to familiar markets such as Singapore, Australia and the UK. The Philippines is still a new market for local investors.
However, the Philippine economy has been growing at a spectacular pace in the past few years, and is one of the bright spots in Asia, says Julius Guevara, director and head of research and consultancy at Colliers International, the Philippines.
“GDP growth in 2013 at 7.2% was second to China (7.7%). The services sector has contributed much to this growth, particularly the BPO (business process outsourcing) sector. Overseas Filipino workers (OFWs) based abroad have also propped up the economy, as they continuously send their hard-earned salaries back home. Real estate and construction are also significant contributors to the economy,” he says.
“The country has a significant housing backlog to the tune of 1.4 million homes as at 2011, and most of these are in the low-income segments, which are now able to finally afford housing due to the low-interest rate environment and through the help of their OFW relatives who are sending money so that they can buy better housing. This has supported a condominium boom in Metro Manila and the secondary cities, as well as horizontal development in the provinces,” he explains.
“Luxury condominiums are a hot commodity these days, mostly due to the low yields that investors would get if they invested in bonds. Therefore, real estate is a more attractive investment nowadays. Regional investors from Singapore and Hong Kong are also coming in due to the cooling measures in their own housing markets, limiting their investment options and forcing them to look outside their home economies.”
However, the real estate consultant predicts a general slowdown in the condominium market in Manila, particularly in the affordable segment — in the price range of PHP1.2 million to PHP3 million (RM88,000 to RM220,000)— due to the high inventory levels. He predicts the condominium market in Metro Manila will be neutral in the next three years as the high inventory is absorbed.
Despite the predicted slowdown in the market, Ventura is confident that it will not affect all projects the same way.
“Monarch Parksuites is designed to be part of the luxury condominium category. It has attracted a unique market of investors and end-users who have seen its potential because of its strategic location at the Bay City, a new flagship development in the Philippines, which is patterned on Marina Bay in Singapore.
“Most importantly, the area has a limited supply of residential condominium units. This is why we have seen a very strong demand for our units there among investors and end-users alike. From our experience in the area, property values have increased by 15% in just a little over a year,” she says.
Monarch Parksuites in Manila Bay, Metro Manila, has a gross development value (GDV) of PHP11 billion (RM808 million). It will comprise four 18-storey towers, with a total built-up of approximately 195,000 sq ft.
The development is located within the enclave of Bay City — an agglomeration of several developments including the SM Mall of Asia Complex, Aseana City and Philippine Amusement and Gaming Corporation (Pagcor) Entertainment City.
The SM Mall of Asia is the 10th largest mall in the world and attracts more than 200,000 people a day. The complex includes a sports arena, convention centre and BPO office buildings. The BPO industry is a significant contributor to the Philippine economy.
Bay City is a 1,500ha master planned development initiated by the government as part of the Manila Bay Reclamation Area. To date, only 60% has been reclaimed, which means there is a lot of opportunity for real estate investment appreciation, according to Goh.
Guevara says, in accordance with the master plan, expansion will take place through reclamation up to Las Pinas.
Meanwhile, Pagcor Entertainment City, spearheaded by Pagcor, is an ambitious initiative by the Philippine government to build a 100ha gambling and leisure haven to rival the likes of Macau and Las Vegas. It will comprise four major casino resorts: Solaire Resort & Casino by Bloomberry Resorts Corp, listed in the Philippines; City of Dreams Manila by Melco Crown (Philippines) Resorts Corp, a subsidiary of Melco Crown Entertainment; Manila Bay Resorts by Okada Group’s Tokyo-listed Universal Entertainment Corporation; and Resorts World Bayshore by Genting Hong Kong Ltd, through its joint-venture company Travellers International Hotel Group Inc. As of now, only Solaire Resort & Casino has been completed.
“The developments within the area will create hundreds of thousands of jobs and they [the workers] all need a place to live,” says Anchor Land’s Ventura.
The Monarch Parksuites project will offer a total of 1,484 residential units, ranging from one bedroom to three bedrooms, as well as loft-type units with four bedrooms. “The price per square feet ranges from PHP13,285 to PHP15,608 (RM977.63 to RM1,148.58), which is almost the same as comparative developments nearby. We tried to establish our competitive advantage through a better location, wider common area and world-class amenities,” says Ventura.
Some 50% of the units have been sold since September 2012 and the project is due to be handed over in the last quarter of 2016. “Since the project was launched, property values have appreciated by 15%,” she says, adding that most of the buyers comprise investors and very few actually intend to move into the units.
“Monarch Parksuites is projected to have a rental yield of 10% per year once it’s completed, while the property market in Malaysia is maturing and is only able to give a yield of 3% to 5% on average,” says CBD Properties’ Goh.
The average rental yields in the Manila Bay area range from 7% to 10%, according to Anchor Land.
Meanwhile, Colliers’ Guevara says “It is too early to tell what the average rental yields in Manila Bay will be since this market is still in its relative infancy and it is too early to know the appreciation rates in Bay City. However, investments in Manila are usually long-term holds and not subject to the same type of ‘flipping’ found in other markets while appreciation in general is around 7% a year in the Philippines”.
“Residential buyers in the Manila Bay area tend to be expats who like the lifestyle there and are entranced by the sunset views. Many Chinese buyers, both local and from the mainland, also invest in projects in the area,” he says.
“I would think that many of the workers in the area would still live outside the reclamation area since housing would still be unaffordable for the common employee in this area. Cavite is nearby and housing in that area is still quite affordable.”
However, Anchor Land predicts that accommodation for many employees will be borne by the companies, which are more than able to afford units there.
“The investment is very affordable. Prices start from approximately RM310,000 after conversion as the unit sizes are small. The small sizes also make it easier to rent the units,” says Goh.
There will be a discount of 3% to 10% based on the buyer’s payment options. Loans of up to 80% will be available for prospective buyers from the Philippines’ largest bank, BDO Unibank, more commonly known as Banco De Oro, as well as China Bank. According to CBD Properties, there are no legal restrictions on Malaysian buyers in applying for these loans.
An added attraction is that the units will be fully furnished, and be fully managed. An in-house leasing and management team will help owners lease and manage their units. Services provided include rent collection, attending to repairs and maintenance.
“The number of units allotted to Malaysian market will depend on the market response since there is limited supply,” says Ventura. Anchor Land, she adds, intends to market more developments here in the future.
CBD Properties is conducting roadshows and private events to create awareness and exposure to this new investment destination. Monarch Parksuites held its Malaysian launch at the JW Marriot in April. Of the 60 invited guests, 30 booked units that same evening and have since proceeded to make payment, says Goh.
The next roadshow will be at the iProperty expo at City Mall, Kota Kinabalu.
“Anchor Land has already come up with the development plan for the next five years but this will be announced later on,” says Ventura.
Anchor Land’s ongoing projects include Monarch Parksuites, Admiral Baysuites on Roxas Boulevard, and projects in Manila Chinatown, Princeview Parksuites and Oxford Parksuites. Due to be handed over this year is its landmark project, Anchor Skysuites, and Phase Two of its award-winning development in Bay City, Solemare Parksuites.
This article first appeared in The Edge Malaysia Weekly, on June 23 - June 29, 2014.
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