The Philippine real estate sector could regain lost ground
The Philippine real estate sector is likely to regain lost ground in 2022 as the country transitions from the Covid-19 pandemic to “endemic” management, but it will take longer to regain its pre-pandemic momentum, said real estate consultancy firm Colliers.
“We are hoping for a V-shaped recovery, but I think it will be a slow and gradual recovery,” said Joey Roi Bondoc, associate director of Colliers, during a real estate briefing last week.
In the office property segment, Colliers Senior Manager Dom Fredrick Andaya said average office rental rates in Metro Manila fell 12.4% in 2021, but that was slower. than the 17% decline in 2020.
Colliers expects a slow office market recovery from the second half of 2022, supported by sustained office absorption.
Over the whole of 2021, office property transactions increased by 18% to reach 422,000 m².
However, the office vacancy rate reached 15.7% in 2021, which is higher than the 9.1% posted in 2020.
This year, Andaya said the vacancy rate will rise further to 18.9% due to muted pre-letting activity and the completion of new office supply. But this is expected to peak around the 19% level and start to plateau in 2023.
Andaya said vacancy rates could remain at double-digit levels through 2025 unless new demand from business process outsourcing firms, Philippine Offshore Gaming Operators (POGOs) and other occupiers is not increasing faster than expected.
And with the new office supply coming this year, rental rates are expected to drop another 10%, even though transaction volume has increased each quarter.
In the residential segment, Colliers said secondary market rental rates fell in the fourth quarter of 2021 as demand from expats and local professionals remained subdued.
However, a slight rebound in rents is expected by the second half of 2022, as more and more companies call their employees back to their offices.
The residential rental rate in the metropolis should improve by 1.7% this year and by 2.3% until 2026.
Colliers Managing Director Richard Raymundo said: “The bright spot here is that we are seeing good support for residential homes and lots in the horizontal segment.
“That’s why if you look at all the developers there’s been a shift in their launches to horizontal because it seems like there was a demand for that versus condos [high-rise or vertical residences].”
The retail segment, he said, could experience a rapid recovery as the economy reopens, similar to the rapid increase in foot traffic during the Christmas holidays when mobility restrictions were eased. .
For the hotel segment, Colliers said occupancy improved in the second half of 2021, in part due to the arrival of more Filipinos using hotels as quarantine facilities. While travel restrictions will continue to stifle demand, Colliers expects a slow recovery in hotel rates from this year, alongside further improvement in occupancy.
Colliers forecast a four percent increase in hotel rates in Metro Manila this year to an average of $66 per day, while occupancy is expected to rise to 50 percent from 44 percent last year.
“We do not see an immediate rebound for foreign tourist arrivals, especially given the impact of the Omicron variant on global air travel. In our view, local tourists, especially Filipinos returning from overseas, will continue to spur the occupation,” Bondoc said.
“We remain cautiously optimistic about the potential for a rebound in the leisure sector, in part due to Filipinos’ improved propensity to spend on leisure-related expenses and the government allowing more versatile hotels to reopen. .
“Meanwhile, hoteliers must continue to disinfect their facilities; comply with government protocols; and setting up marketing initiatives,” he added.
For industrial leases, Colliers expects warehouse rental rates to grow at a faster rate than ground leases in 2022. The rental rate is expected to rise 2.8% from 0, 6% last year.
Colliers is seeing more and more developers with a logistics portfolio renting industrial space to meet growing demand for e-commerce and online grocery shopping.
PHILIPPINE DAILY ENQUIRER/ASIA NEWS NETWORK