The Philippine property market’s rebound next year will be driven by office and residential buildings, according to property consultant Colliers.
In its report, Colliers also said that while it believes in the so-called revenge spending by the consumers, there may still be an oversupply of retail spaces.
Colliers said the vacancy in the retail sector will rise to about 17 percent, as 523,700 square meters of fresh retail space will be delivered through next year but demand from consumers was tepid due to the lockdown situation in Metro Manila and nearby provinces.
“Over the next 12 to 24 months, we encourage mall operators to be cautious of new supply. Colliers observed that developers have been cautious in completing new malls and this was evident in 2020 when only 53,100 square meters of new space was completed. This is significantly lower than the annual average of about 323,200 square meters of new supply from 2017 to 2019,” it said.
In January to September, retail rents dropped by 5 percent, from a 10-percent decline in the same period a year ago.
The property consultant expects rents to recover slowly starting 2022 with an improved vaccination program and a government-projected economic recovery spurring an increase in consumer spending.
“Filipinos’ growing propensity to shop online remains an important factor that will likely influence physical mall space absorption beyond 2022. Colliers recommends that retailers expand their e-commerce presence and maximize technological advantages,” it said.
In general, however, there will be a rebound in the property sector, which has been affected the most by the pandemic.
Joey Roi Bondoc, Colliers associate director and head of research, said the office, residential, retail and industrial sectors will benefit from a macroeconomic rebound.
“Landlords should prepare to capture pent-up demand while tenants and investors should maximize opportunities as the market is on its way to recovery,” he said.
For the office sector, the company said it projects new supply to reach 723,400 square meters by the end of 2022 as office deals will pick up within and outside of Metro Manila.
“Colliers also sees more landlords and occupiers embracing the healthy and sustainable route to office development and leasing. We believe that the adoption of sustainable office spaces plays a crucial role in future-proofing office towers beyond 2022. In our view, there will likely be a heightened preference for sustainable buildings that provide natural lighting and optimize air quality, among other features.”
There may be some 9,700 units of residential units to be delivered in 2022, up 18 percent from 8,200 units this year, with the Manila Bay area likely accounting for 60 percent of the new supply. Prices and rents are also both seen to recover.
For the industrial sector, vacancy is seen to drop to 5.5 percent from 5.6 percent this year. Rents will increase by 3 percent, as demand for cold storage facilities will rise to sustain demand for industrial assets in the next 12 to 36 months.
“We also anticipate an increased demand for warehouses from e-commerce and logistics firms.”