METRO Manila is among the top cities in three indicators in Cushman & Wakefield’s “The Prepped Cities Index,” but overall, it ranked as one of the worst performers, coming in at 15th out of 17 cities.
In its inaugural Prepped Cities Index, published in November 2018, Cushman & Wakefield looked at eight indicators, namely obsolescence, rent volatility, talent, cybersecurity, terrorism, sustainability, environment susceptibility, and governance, to assess the preparedness of 17 major cities in the Asia Pacific region amid operational uncertainties.
The index is aimed at informing stakeholders of the strengths and weaknesses of the cities that may affect the real estate market.
Specifically for Metro Manila, the company noted that it has a healthy supply of new buildings associated with the infrastructure programs being implemented by the administration, together with laws to attract more foreign investments in the country.
“Manila has a healthy supply of new buildings due to incoming businesses fueled partly by the current administration’s Build-Build-Build program, the development of hard infrastructures combined with the passing of more progressive laws for foreign businesses. Part of this foreign direct investment is being channeled into real estate development, explaining the high levels of quality office stock under construction,” Francis H. Viernes, manager of research and consultancy of Cushman & Wakefield Philippines, told BusinessWorld in an e-mail.
One law that Mr. Viernes cited was the Ease of Doing Business, which aims to make the process of putting up and running a business in the Philippines easier and more efficient. This was signed into law in May 2018.
As for rent volatility or the movement of rent, “Given that demand for office space is high and always outpace demand, rent steadily moves upward…. We are more stable in terms of rent,” he said. The real estate markets of other cities are considered to be more mature than that of Metro Manila, which leads to the dropping of prices of real estate properties at times.
Metro Manila was also one of the top cities when it comes to talent, as noted in the company’s findings, given the healthy pool of young professionals that the country generally has.
But these three positive indicators were offset by Metro Manila’s bad performance in the remaining categories.
The city was among the worst in sustainability and environment susceptibility, specifically in the percentage of Leadership in Energy and Environment Design (LEED) certifications, which rates how “green” a building is, at only 14%, the lowest across the Asia Pacific region. This means that the city cannot sustain operation when water and power shortages occurs. Moreover, the metro’s buildings are not energy-efficient as reflected in the consumption of large amounts of energy and water.
But the study did note that, in general, developers in the Philippines have increased their awareness about sustainability, and are now seeking LEED certification. Moreover, the country has developed its own version of LEED, which is the BERDE certification. Although generally the same, BERDE certification has an additional parameter for local issues like heritage conservation.
The metropolis also ranked at the bottom when it came to cybersecurity and terrorism. The company noted that the low ranking in this indicator is due to indifference and lack of technology and skills to counter such attacks. Still, the firm is positive that the country will be able to perform better in this indicator in the future thanks to the National Cybersecurity Plan 2020, which was launched in 2017 and includes plans and solutions to improve the country’s cybersecurity.
Thanks to issues related to the current administration, fiscal incentives, relationship with other countries, and human rights violations, the metro’s ranking when it comes to governance was also among the worst. The company said in the report that these issues have greatly affected the decisions of multinational companies to set up their headquarters or put up operations, overall, in the Philippines.
Of the 17 Asia Pacific cities considered in the report, Singapore was the most prepared city, followed by Melbourne, Shanghai, Tokyo, and Shenzhen to complete the list of five most prepared cities in the Asia Pacific Region. The bottom five are Bangkok, Delhi-NCR, Metro Manila, Mumbai, and Jakarta.
Singapore was in the top half of the list in all indicators. Melbourne also showed good performance in the majority of the categories, but the city’s lack of new office supply and political changes placed it at second, while Shanghai placed third thanks to its low cost volatility, and a healthy supply of new offices, although weakness was observed in governance, and environment susceptibility.
Those at the bottom rank have improvements to do, most especially when it comes to cyber security and emergency management plans. — Bamba Galang