The improving business climate and the government forecasted growth this year is expected to support the property sector’s rebound over the next 12 months.
This is what Colliers shared in its February 15, 2022 report titled “Primed for turnaround: Property on rally as economy reverts to recovery.”
Colliers is a leading diversified professional services and investment management company. With operations in 64 countries, Colliers’ 17,000 enterprising professionals work collaboratively to provide expert real estate and investment advice to clients.
According to the report, manufacturing and construction, including infrastructure implementation, were the main contributors to the country’s economic rebound. Reports indicate that the Philippine economy expanded by 5.6 percent in 2021.
Eased restrictions
The imposition of Alert Level 2 in the latter part of 2021 also helped increase consumer spending.
“In our view, the improving business and consumer sentiment should also buoy the property market, especially the office and residential segments. Developers should remain strategic with their landbanking initiatives as they intend to capture pent up demand for offices, residential units, retail spaces and industrial parks and facilities beyond 2022,” the report said.
Remittances from Overseas Filipino Workers (OFW) are also expected to drum up demand for houses and condominiums. In November 2021, OFW remittances reached P1.6 trillion, a 5.3 percent increase in the same period in 2020. This year, the Bangko Sentral ng Pilipinas (BSP) estimates that remittances will grow by four percent.
“Colliers believes that the growth in remittances should partly buoy take-up for vertical and horizontal units within and outside Metro Manila and support retail spending,” the report said.
Office space
Looking at the various property segments, Colliers noted that office deals in 2021 reached 422,400 square meters, an increase of 18 percent from 357,400 square meters in 2020.
Traditional tenants (companies in various sectors such as legal, engineering and construction, government agencies and flexible workspace operators) made up the bulk of office space absorption followed by outsourcing firms. Most of these companies took up spaces in Ortigas, Makati and Fort Bonifacio.
Many companies are already preparing their back to office plans and these should sustain take up over the next 12 months.
“In 2022, we expect traditional and outsourcing occupiers to lead absorption in the capital region. Outside Metro Manila, we project a sustained demand in Cebu, Pampanga and Iloilo,” Colliers said.
Residential segment
In the residential segment, the year 2021 saw the completion of 8,731 condominiums, a 159 percent increase from the 3,370 units delivered in 2020. These new units are located in the Bay Area and in Fort Bonifacio.
A drop, however, was noted in condominium pre-selling in Metro Manila. While around 27,000 new properties were introduced, only 12,000 were taken up.
For house and lots, Colliers noted that more Filipinos were looking for projects outside of Metro Manila. Among the popular locations were key urban areas in northern and southern Luzon including Pampanga, Tarlac, Bulacan, Cavite, Laguna and Batangas where residential projects are between 86 percent to 97 percent sold as of the end of 2021.
“Colliers believes that a steady inflow of remittances from Filipinos working abroad should help sustain take-up for these horizontal projects beyond 2022,” the report said.
Retail
On the retail side, Colliers projects between now and 2024, there will be an annual completion of about 357,900 square meters of new leasable space as there are developers who are optimistic that the rebound in retail demand will go beyond 2022. The malls that are likely to be completed over the next three years include Mitsukoshi Mall, Ayala Triangle Retail, Greenhills Center Expansion and Parqal Mall.
While Colliers was optimistic that the property sector would rebound this year, the company advised that stakeholders should look out for rising interest rates; implementation and direction of infrastructure development; decentralization beyond Metro Manila and the approval and implementation of policies that improve the business climate.
“In our view, office landlords and residential developers should remain agile and be mindful of the economy’s recovery prospects beyond Covid-19. Developers should be more strategic with their landbanking initiatives if they are to capture pent-up demand,” Colliers concluded.