The pandemic-induced disturbances have changed the Philippine economy and the real estate sector.
However, the government’s ongoing vaccination program offers a glimmer of hope, while its expected recovery is expected to increase the appetite of local investors and end users for housing projects. This development is seen to increase the demand for condominium projects in Metro Manila, especially in key business centers such as the Bay Area.
It is important that we identify the assets for housing restoration in the next 12 to 18 months. Are we starting to turn a corner? Will the green shoots of recovery result in a more robust and dynamic Philippine property beyond 2021? These are some of the questions we get during our property briefings.
This year, Colliers expects a restoration of the new condominium, as developers are already investigating the viability of new project launches in key areas across Metro Manila. Improvements in launches and completions send a positive signal especially to a supply-driven condominium market like the Philippines.
Recovery of the office market
Based on a report published by Colliers Asia Pacific, Metro Manila remains one of the most attractive places for business outsourcing in the region. Factors identified in the report include competitive rents, infrastructure improvement and the availability of office space approved by the Philippine Economic Zone Authority (Peza).
Despite the pandemic, outsourcing companies are occupying space over Metro Manila. In our opinion, the occupation of traditional office space remains an integral part of outsourcing corporate strategies after the pandemic. This should ensure a recovery of the occupancy and rental price after 2021.
The regional Colliers report identified the Bay Area as one of the most attractive suburbs in Metro Manila for business outsourcing. Therefore, we see Bay Area attracting new BPO residents beyond 2021. In our opinion, Bay Area will continue to attract more locators due to the availability of Peza-proclaimed space, proximity to the airport and other important public projects and the presence of complementary residential towers.
Colliers estimates that approx. 337,000 sqm of new office space is likely to be completed in the Bay Area from 2021 to 2023, accounting for 15 percent of the new delivery in Metro Manila during the period. Bay Area thus provides an opportunity for companies to consolidate due to the availability of office buildings with large floorboards.
Activating players in the rental market
Complementing the office market is the owner-occupied rental sector, which is likely to expand in the next 12 to 36 months.
We see the completion of approx. 15,000 new condominiums in the Bay Area from 2021 to 2023, representing approx. 60 percent of the new completion in the period.
In our opinion, certain recovery drivers give a sense of optimism in the market. In May 2021, remittances from Filipinos working abroad increased by 13 percent, representing the fastest growth rate recorded since November 2016. Data from the central bank also reveal that remittances in the first five months reached $ 12.28 billion from the $ 11.55 billion recorded a year ago. . OFW transfers continue to be one of the main drivers of housing demand.
Colliers believes developers need to be aware of the charged demand that is likely to kick in when the economy recovers. Below are some of the recommendations that we believe developers should implement to take advantage of the expected rebound in condominiums.
Maximize online platforms
Colliers encourages developers to consider maximizing their presence on social media and other digital platforms to inform potential buyers about their available and upcoming projects. Increased online presence can also help investors stay up to date on any developments in their acquired properties. With mobility restrictions imposed by COVID-19, developers should organize virtual showrooms and exhibits showcasing real estate offerings and investment opportunities. Apart from virtual exhibitions, we also recommend developers to make inquiries and acquisition of property more convenient and accessible by allowing an online option for payment and other transactions.
Incorporate new facilities
We believe that condominiums continue to be an attractive investment opportunity among home buyers. To further attract more investors, some developers have incorporated features such as built-in fiber optic Internet connection, collaboration rooms, video conferencing rooms, designated smart storage spaces for contactless package deliveries, and open recreational spaces for gardening and physical activities. Colliers encourages developers to continue to improve the facilities within their properties.
Innovative pricing, promotions
Colliers has observed that developers have been active in offering promotions to attract buyers. Some developers also offer split or no payouts, lower booking fees and free items like appliances, furniture and gadgets. In our opinion, investors planning to acquire housing units should monitor the discounts and promotions in both the secondary and pre-sale markets, while developers should continue to be innovative with their freebies and flexible with their payment terms.
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