Monday, December 29, 2014

Real Estate in 2015, Part 4: The Growing Middle Class

A growing middle class will lend to a robust, flourishing consumer base, thus fueling the demand for retail spaces and residential property.
2015 is upon us. What does the forthcoming year herald for the property industry? According to experts, the market for real estate is poised for further growth, thanks to several key factors. 

Part 1 identified the ASEAN integration as a primary driver for growth; Part 2 named the BPO industry as the top market for office spaces; Part 3, delving into the end-user, noted that OFWs fuel the demand for residential and retail developments with their remittances. Here, take a look at how another segment of the end-user -- the middle class -- factored prominently into the projected growth of the property sector in 2015.

4. A growing middle class

In a report titled "The New Age of the Asia Pacific Real Estate Market," CBRE Asia Pacific issued that major cities in the Philippines, along with those in Vietman, Indonesia, and Malaysia, should expect their middle class to triple in numbers by 2020.

A real estate advisory firm, CBRE Asia Pacific projected that the middle class in the region will consist of 1.74 billion people by 2020(1).  By contrast, the total middle class population in the area was pegged at 525 million in 2009.

A larger middle class is a larger consumer base. This segment’s growth, coupled with a thriving economy, should give way to higher demand for retail spaces and developments that allow for more consumer goods, not to mention a higher rate of consumer spending and activity.

Additionally, the middle class drives the demand for residential housing, especially within its segment of the market. While all segments of the industry enjoyed growth, KMC MAG Group has predicted that “projects priced at reasonably affordable levels will enjoy higher take-up, as the target buyers are increasingly coming from the middle class.”.

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The continued growth of middle class gives way to a robust, flourishing consumer base. As such, this sector is seen as a primary driver of growth not only for the economy, but for the real estate industry too. 

In the next part, take a look at an industry that makes up 70 percent of the country’s GDP.

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