Real-estate broker Leechiu Property Consultants Inc. said demand for office space could decline by almost half this year due to the coronavirus disease (Covid-19) pandemic, which prompted the government to place Luzon under enhanced community quarantine.
David Leechiu, president and CEO of the company, said office supply could also go down at almost the same pace, as the ECQ has resulted in the stoppage of construction work.
“Things will start to return to normal by August,” he said during the company’s online briefing.
Office demand by year-end would be between 800,000 square meters to 1 million square meters of office space—the same space needed by Philippine offshore gaming operators (POGOs) and business process outsourcing firms (BPOs).
In contrast, last year there were 1.7 million square meters of office space transactions, or a reduction of between 41 percent and 52 percent.
This still means that there won’t be a glut in office space as there will be an equal reduction in both supply and demand.
BPOs and POGOs, he said, “are the essential catalysts to sustain this equilibrium.”
The company recorded 157,000 square meters of office transactions in the first quarter of 2020, down by 47 percent year-on-year.
“Nevertheless, there are 636,000 square meters of live requirements being transacted today, and we expect this demand to grow by another 25 percent. Many of these transactions to be completed beginning second half of 2020,” said Leechiu.
The strong comeback of the POGO sector once travel bans are lifted, with growth coming from all over Asia would drive Philippine office demand, he said.
Delays in fresh office supply may be felt some two to three years later since most of the companies are already in the thick of building their office buildings and can only suspend work, but they will push through with the construction. It takes about four to five years to complete a building.
“Thus, we are recalculating 2020 Philippine supply and reducing it by 44 percent to 842,000 square meters from our initial 1.49 million square meters,” said Leechiu.
He noted, however, that 2018 and 2019 were “exceptional” years in the property market of the country as it grew at “breakneck speed.”