I recently had the privilege of presenting at the Asia Real Estate Summit in Manila. My topic “Manila on the World Stage” is testimony to the city’s ascendency on the world stage. Manila is now one of the Top 30 cities in the world globally – according to JLL’s Commercial Attraction Index, which measures a city’s economic and real estate power.
The Philippine capital is undergoing rapid growth and transformation in terms of its population, economy and real estate market.
The fundamental figures are strong, with both GDP and office stock growing at a considerable rate. However, Manila’s broader strengths and increasing global standing are starting to be recognised. Manila has jumped seven places up JLL’s Commercial Attraction Index between 2013 and 2014, taking its place amongst the global elite.
Manila, and the Philippines as a whole, is already well-known for its strengths in business process outsourcing (BPO). Drawing on a young, well-educated and English-speaking workforce, Manila rivals the top Indian cities, such as Bangalore and Mumbai, as one of the leading BPO destinations in the world. Within the last year, BPO employment in the country has surpassed one million, with around 100,000 jobs added in 2014 alone. However, if it is to fulfil its considerable potential, Manila must move beyond a narrow focus on BPO, taking full advantage of its technological strengths and building new, higher-value capabilities.
Manila is remarkable for its sheer scale – it is the world’s fourth most populous city (with nearly 25 million people) and one of the world’s twenty-five largest metropolitan economies. Real estate investment volumes, however, lag well behind. Yet size and scale are no longer enough in a world of intense city competition. Increasingly, the language of competitiveness and global fluency are dominating the debate on cities – revolving around issues of international identity, transparency, talent and liveability, for example.
Manila, like all emerging megacities, faces a range of challenges that come with rapid growth. From fragmented administration and lack of infrastructure, to resilience and a weak international reputation, cities must confront their challenges in innovative and efficient ways, in an attempt to differentiate themselves from their peers. City leadership, innovative funding, improving transparency and fostering innovation are key areas for these cities.
City leadership plays a role in driving the city forward, whether that be through a charismatic and visionary mayor, or through a pragmatic, long-term plan for a city’s future. One just has to look at the South American cities of Medellin, Bogota and Curitiba to see the impact mayors can have in completely transforming cities. Manila has made progress, with the ‘Dream Plan’ Transport Roadmap and the Greenprint, which set out a path for Manila’s development over the next 15 years. However, the city’s administration remains fragmented, represented by a number of municipalities co-ordinated by the relatively under-powered Metropolitan Manila Development Authority.
Manila also faces infrastructural shortfalls as the city expands, with congestion a major problem. In the face of diminishing funding from traditional sources, cities like Manila need to look for innovative new methods of securing investment. Indeed, cities will increasingly have to turn to the private sector to help fund much-needed public projects. The proliferation of public-private partnerships (PPPs) is evidence of this growing trend. Some of the most savvy city governments are working even more closely with business, following a ‘collaborative city’ model which encourages links between business, landlords and city governments.
Transparency is also key, with fairness and openness being key factors in attracting investment. JLL’s Global Real Estate Transparency Index has rated Manila as ‘semi-transparent’, having made good progress over the years, especially in terms of real estate taxation, land use planning and enforceability of contracts. However, as with many Southeast Asian cities, there is still work to do. Manila must look at, and learn from, the likes of Helsinki, with its ‘open data’ approach to governance, and Rio de Janeiro, with its state-of-the-art central operations centre.
Tech-rich cities are increasingly leading the way, with Silicon Valley at the forefront. Dozens of imitators have unofficially adapted the ‘Silicon Valley’ moniker for their own cities – from Chilecon Valley and Silicon Plateau, to Silicon Savannah and Silicon Allee. However, emulating Silicon Valley’s success is more complicated than just branding. Cities need access to talent and to create the correct environments for innovation and entrepreneurship to flourish. To excel, Manila needs to embrace technology and innovation, forging links between businesses, universities and city governments. While Manila has long way to go to catch up with the global hubs, it is in a good place to position itself ahead of many regional peers.
There is reason to be both optimistic and anxious about Manila’s future. While Manila continues to grow rapidly, obstacles to long-term growth are beginning to present themselves. As the world continues to globalise, the likes of Manila have the opportunity to leverage their strengths and establish themselves as leading global cities for businesses. To take advantage of this, however, Manila must make itself seen on the international stage, boasting of its strengths, recognising its uniqueness and building a compelling global brand. Real estate will play a pivotal role in defining the future successes of Manila, driving change and not merely being a consequence of it.