Jump to content

2Q 2016: bears got slapped on their face


Recommended Posts

Hi

 

The new second quarter review is just out and it is clear that retail and office rentals are growing strongly,

office rents are in fact breaking out. Office and retail rental growth now as high as 2011, and in a clear uptrend.

 

 

This report must have shocked a lot of the bears out there, and let me give their forecast now and see how

"demand" forecasting is far superior to "supply" forecasting.

 

OFFICE FORECAST: UBS

http://www.skyscrapercity.com/showthread.php?t=1907685&page=5

MDS investor was expecting a "tenants market" but it is clear that we are in a landlords market for office space.

http://kmcmaggroup.us2.list-manage2.com/track/click?u=6aacd3237c9a8bf0a7abf1d45&id=52c33e9bbe&e=f9500bbb06

It is clear that vacancy rates are dropping fast and rental values are rising rapidly.

OFFICE FORECAST: KMC Mag Group

http://kmcmaggroup.com/blog/2016/1/26/transitions-and-uncertainties-philippine-economic-and-real-estate-outlook-2016/

Early in the year, KMC Savills had a more neutral attitude, still expecting a "landlords" market and stable vacancies

and rents.

Quote "Given this, we anticipate that 2016 will continue to be a landlord's market, and that vacancy and rental rates will remain stable despite the increase in supply."

 

So it is clear that even KMC Savills, which held a more neutral view, had not expected this strength of the market, because we are breaking out to the upside. Vacancies and rents are not stable, vacancies are dropping fast and rental growth is extremely strong. Prices are spiking upwards.

 

And for retail forecasting, MDS investor again got disappointed after seeing these figures, with retail rental growth 1,4pct amid a 16pct supply growth for entire 2016, (let's assume 8pct in 1H 2016) This is the highest supply growth in 20 years and admitted the year is not finised and not all these projects may be delivered on schedule, but the market is absoring this supply easily, which to me indicates that there is hidden strength in this market.

 

Again, this proves the superiority of "demand" forecasting. As for the residential market, let's not forget that Ortigas is still growing -- and this is where the majority of the population of MM lives, so overall it is not such a bad number. I still expect residential rents to stabilize, after slowing their decline from the 1Q to 2Q and so 3Q and probably 4Q might surprise with a slow rise in rental growth in both MAK/BGC -- that's what I expect here and I must admit that I am more in the bullish camp on this. Remember this: the offices are getting filled with people who have jobs, and the middle class in enriching itself due to the increased visits of simply more customers (with probably bigger wallets), so the overall picture looks extremely strong.

 

 

 

 

 

 

 

 

 

Link to comment
Share on other sites

Thanks for posting this.

 

"Vacancies and rents are not stable, vacancies are dropping fast and rental growth is extremely strong. Prices are spiking upwards."

(JLL shows 3.4% q-on-q Growth in Manila Office rents for Q2-2016, and +1.5% for Retail )

 

I think what you are saying about the Office and Retail segments of the market is probably still true.

But the Residential sector is now softening, thanks to the excess supply. This is clear in the Collier's quarterly data

 

This chart is updated through Q2-2016

MakatiCondos-2016Q2_zpsctbofv66.jpg

 

For others who come across this thread, the discussion has continued on the Bubble Debate thread

 

> here: http://www.greenenergyinvestors.com/index.php?showtopic=20877

Link to comment
Share on other sites

RETAIL - Great Malls?

 

They are still talking about Ghost malls in China

 

https://www.youtube.com/watch?v=w3GcLyz0jMM

 

Published on Aug 14, 2016

Documentary by SBS Dateline (Australian TV) about the Chinese real estate market. Original link to SBS Dateline video:

 

And now deterioration is now creeping in at "the not-so-Great Mall of China"

 

Meantime, I think the Philippines has something like 3-4 of the biggest Shopping Malls in the world, and they are mostly doing well

 

Top 10 World's Largest Shopping Malls (updated)

 

> Wiki's List: https://en.wikipedia.org/wiki/List_of_largest_shopping_malls_in_the_world

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...