Thursday, December 20, 2018 - For the Philippine property market in 2019, flexibility will be the name of the game. The strong demand and evolving preference of tenants is giving rise to flexible workspaces; residential developers are tweaking their projects to cater to Chinese offshore gaming employees and local professionals; and mall operators are more open to foreign food and beverage (F&B) and home furnishing tenants, which we see redefining retail space absorption in 2019. Developers are also cashing in on the thriving property market by aggressively acquiring parcels of land outside of the more established business districts.
We encourage developers to continue tapping into the demand brought about by these aspects of the Philippine market. In our opinion, developers should also push for the timely completion of infrastructure projects that should help sustain the dynamism of the Philippine property market in the next 12 months.
Amid the slower economic growth in the first nine months of 2018, the property sector remains resilient with major segments such as office and residential poised for record-high demand and supply in 2018. However, we see challenges ahead, primarily:
> Rising interest rates which could dampen low to mid-income residential demand over the next 12 to 24 months. We believe that a volatile interest rate environment could entice local developers to be more open to partnering with foreign firms.
> Rising inflation that curtails consumer spending, which accounts for nearly 60% of the country’s economy.
> Continuing private construction delays due to the acute shortage of skilled workers and ramped up implementation of public infrastructure projects.
> Uncertainty surrounding the implementation of the second package of the Comprehensive Tax Reform Program. The measure proposes to reduce corporate income tax rates and rationalize tax and non-tax perks granted to foreign investors.
> Right-of-Way issues obstructing the construction of vital infrastructure projects across Metro Manila. These projects, once completed, should ease access to major business districts in Manila and play a major role in dictating developer strategies over the next three to six years.
CLICK IMAGE TO VIEW FULL REPORT