Philippine property developers weigh infrastructure risk in government joint ventures

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Philippine property joint ventures risk

Highlights

Commission on Audit flagged P7.91 billion in delays and issues in seven Bases Conversion and Development Authority infrastructure projects, prompting stricter due diligence by developers.
Developers now extend review periods for government joint ventures, factoring infrastructure delay risks into financial viability and implementation schedules, especially in emerging growth areas.
Land value appreciation forecasts remain strong for established districts like Makati and Bonifacio Global City, while infrastructure delays weigh more heavily on new growth areas such as Clark, Pampanga.

Audit findings sharpen due diligence focus

As reported by BusinessWorld Online, property consultants say developers are likely to apply stricter due diligence when evaluating potential partnerships with government entities after the Commission on Audit flagged delays and implementation issues in seven infrastructure projects worth P7.91 billion under the Bases Conversion and Development Authority.

Savills Philippines Head of Research Dino G. Palanca says these concerns can push developers to examine project timelines, right-of-way readiness, funding commitments and accountability mechanisms more carefully before entering into partnerships. He adds that the issues do not necessarily deter joint ventures, provided contractual obligations are clear, monitoring is transparent and risks are properly allocated between public and private parties.

Colliers Philippines Director of Research Joey Roi Bondoc says the immediate effect may be a longer review period before private companies join government-backed projects. He says developers need to factor possible infrastructure delays into both financial viability assessments and implementation schedules.

Jones Lang LaSalle Philippines Head of Research and Advisory Janlo de los Reyes says appetite for joint ventures still varies by developer size and financial capacity. He says larger groups may rely more on their own resources, while smaller developers continue to see partnerships as a way to pursue projects, especially in residential segments.

Land values and lease strategies face mixed effects

Analysts say infrastructure delays can also affect expectations for land value gains, particularly in emerging growth areas where transport links and accessibility are central to investment decisions. Bondoc says developers closely track public infrastructure because it supports their own projects and can shape assumptions on future land appreciation.

Palanca says areas such as Clark, Pampanga, may be more exposed to delays in planned connectivity projects, while mature districts such as Bonifacio Global City and McKinley Hill already benefit from established infrastructure and stronger demand. He says delays can postpone a location's full development potential by reducing accessibility, increasing development costs and slowing investor activity, although property values still depend on broader factors such as supply, demand and the quality of surrounding developments.

De los Reyes says established business districts including Makati and Bonifacio Global City are likely to continue seeing land value appreciation, supported by office demand and investment activity in Metro Manila. He adds that any impact from delayed infrastructure is more relevant in locations directly tied to those projects.

On leasing, analysts say delays do not automatically justify higher commercial lease rates for government-owned properties. Bondoc says raising lease rates while infrastructure projects remain delayed would add pressure on private investors, while Palanca says any adjustments should still depend on occupancy, tenant demand and competitive market conditions. De los Reyes adds that government property managers may still aim to protect or improve lease collections, but any changes are likely to be benchmarked against prevailing market rates.

In our earlier article, we examined the Philippines’ planned sovereign bond reforms aimed at making peso government securities easier to trade and supporting potential inclusion in J.P. Morgan’s emerging-market bond index. We noted that while these steps can improve liquidity and broaden participation, the bigger payoff still hinges on fiscal credibility and—crucially—whether public spending is executed well, since delayed or poorly chosen infrastructure projects can undermine the benefits of cheaper funding.

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