What bubble? Analysts see sunny property sector

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(File photo)

(CNN Philippines) — Despite fears of a growing real estate bubble, some analysts believe that the Philippine economy can rest easy for now. If anything, the property sector can look forward to more expansion — especially in cities.

"There is no truth to the rumor that there is going to be a real estate bubble," said Board of Real Estate Service Chairman Eduardo Ong during this year's Asia Real Estate Summit.

"We are in the midst of an urban revolution," explained Jeremy Kelly, director for global research of real estate services firm Jones Lang LaSalle (JLL). "[C]ities have become the heartbeat of the word... land and real estate are the heartbeat of cities."

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JLL's 2014 Global300 index reports that cities in the list account for roughly 40% of the world's gross domestic product (GDP). Over half of the total commercial real estate investment in the list landed in it's top 30 cities.

That's good news for Metro Manila, which joined JLL's Top30 list in 2014. The firm said that such is symptomatic of a "steady shift in the balance of real estate activity towards the Asia Pacific region."

Rising star

Kelly noted that in 2010, Metro Manila ranked 28th in the world in terms of city GDP. He predicts the metropolis to rise to the 25th spot in 2020, and the 18th spot in 2030.

"Real estate will play a key role in [Metro] Manila's success, and will be a driver of its success."

He also pointed out that the market has one of the highest rates of absorption among its Asian peers, and is one of the most affordable in the world.

Nevertheless, his praise comes with a caveat: Kelly stressed the need for the metropolis to adopt its own "foreign policy."

"[Metro] Manila needs to assert its position more forcibly on the global stage," he said.

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Growing IT sector

"Cities that are successful are specialists in certain areas," Kelly said.

The analyst believes that much potential lies in Metro Manila's information technology (IT) sector. "Its economy is far more geared towards IT than its regional peers."

In a Tech-Rich Cities index, Kelly pointed out that Metro Manila ranked 10th in the world from the first quarter of 2014 to the first quarter of 2015, above other cities such as San Diego, Osaka, Munich, and Beijing.

Likewise, he has also noted the increasing role of the city mayor in a locale's development. "We are in the age of the city mayor." Kelly believes that a good mayor can be a catalyst of a city's success, granted that the politician is practical and closer to problems.

Although urban planning poses immense benefits to a city, Kelly said that it can also go too far. He believes that cities should also allow room for organic growth, lest they lose their character and identity. "Over-planned cities lack a soul."