Good news! On July 14, 2009 the government announced that:

Phase 1 of the rehabilitated Philippine National Railways was inaugurated. A commuter train, with the President and the VP on board, chugged along the stretch from Tutuban in Manila to Buendia in Makati City.

Salient points of the report:

[Note: There used to be a link to this report from the website of the Philippine Information Agency but the page no longer exists.]

• The trains started commercial run the following day from Tutuban to Buendia, passing through Espana, Sampaloc, Sta. Mesa, Paco, Sta. Ana and San Andres.
• For 15 pesos, a commuter can now expect a traffic-free journey from Tutuban and reach Bicutan in 30 minutes.
• By September this year, the route will extend to Alabang and eventually to the Bicol region.
• The Department of Transportation and Communication is now finalizing a uniform ticketing system for the PNR, Metro Rail Transit (MRT) Line 3 and Light Rail Transit (LRT) 1 and 2.
• The second phase, or the North Rail, has been approved by the board of the National Economic and Development Authority and will be started within 60 days.

These plus the extension of super highways and the Skyway along the South Luzon Expressway and more will impact heavily on Philippine real estate.

What to expect:

• Real estate properties along certain points of the railway system will become attractive
• There will be a domino effect in price increase of real estate
• Migration from and decongestion of Metro Manila
• Business relocation especially of Business Process Outsourcing companies

These facts are intertwined; they may overlap one another.

Real estate properties along certain points of the railway system will become attractive

A 2006 Dutch study [this is a PDF file] noted that:

“… households are willing to pay more for housing near (not beside) railway stations due to lower transportation cost and reduced travel time. As workplaces become more accessible, so do leisure areas…”

Population convergence near or around some (not all) of these stations will lead to increased commerce that will push demand for and, therefore, price of real estate. Expect commercial establishments, conveniences and job opportunities to increase in some of these areas.

There will be a domino effect in price increase of real estate

Another study noted that:

“… the price of real estate is highest in city centers and decreases with every unit of distance from the city center. Thus, when some areas are pulled closer to the city center through an improvement in transportation, land values in these areas increase…”

As transportation improves, Filipinos will start moving to locations outside Metro Manila. As they do, commercialization and urbanization in these areas will start, driving up prices of land therein.

In time, these new urban areas will become the sub-city centers for people farther along the line; they will become the new sources of jobs, leisure, and conveniences for these people. The process will be replicated as you move farther and farther.

Migration from and decongestion of Metro Manila

Latest figure from the National Statistics Office puts the population of Metro Manila or NCR at 11,553,427; that’s 12.5% of the projected 92.23 million for 2009 in the entire country.

Forbes.com ranks Manila, our capital, as the city with the highest population density in the world. With a population of almost 1.6 million, it has a density of 41,014 persons per square kilometer. Cairo, Egypt is second with 36,618 per square kilometer. Hindi na mahulugan ng karayom ang Maynila : (

I think migration from Metro Manila will come in stages:

• First will be low-income earners who are forced to settle or rent in Metro Manila because of work. Many will relocate or go back home to the suburbs or even to nearby provinces.
• Second will be middle-class parents who want to live in the suburbs but can’t because of work and their kids who are studying in Metro Manila.
• Third will be some high income earners who will call their weekend mansions in the suburbs their main home.

In Japan, because of its super-efficient transport system, many employees living in, say, the “equivalent” of Batangas City commute everyday to work in Caloocan City. I’m not saying that exactly the same thing will happen here (they have bullet trains and even Maglevs, we don’t). But it will happen to a certain extent.

Business relocation especially of Business Process Outsourcing companies

According to a 2009 newsletter of the Real Estate Brokers Association of the Philippines (REBAP), many BPO’s are starting to move out of Metro Manila due to high office rental rates.

Down south, there are currently 30 call centers in Muntinlupa and 13 in Laguna. Up north in Pampanga, there are 22. Expect more of them to relocate or to put up additional offices outside Metro Manila.

Last year, Jaime I. Ayala, President and CEO of Ayala Land, Inc. announced that several BPO’s have already reserved office spaces in their flagship project, Nuvali,  in Sta. Rosa, Laguna; construction of the offices haven’t even started yet then. (I will write about this very soon.)

These are just a few of the changes that I think will happen. What do you think?

Let’s hope that whoever occupies the highest office next year will have the zeal to continue, even to hasten this program.

By the way, there’s a forum that’s discussing this development. See lots of pictures and interesting comments from those who have experienced the new PNR.

Thank you so much.