While the third-quarter GDP figure of 7.1% shows slower growth compared to the previous quarter, this figure still beats analysts’ projections of only under 4%, which puts average GDP growth from January to September at 4.9%, well within the government’s upper-end target for 2021.
The third quarter gross domestic product (GDP) figure reported by the Philippine Statistics Authority (PSA) shows that the Philippine economy grew by 7.1% in Q3 2021, lower than the 12% recorded for Q2 2021 but exceeding analysts’ expectations. Average GDP growth from January to September now stands at 4.9%, well within the upper-end projections of credit rating firms and the government’s target for 2021.
The improvement in economic output was primarily driven by a rise in private investments as well as consumer and government spending. The gradual reopening of the economy bodes well for the Philippine property market. This could result in greater office and pre-selling condominium take-up over the next 12 months. In Q3 2021, Colliers recorded delivery of 156,600 square meters of new office space, double the 77,700 square meters in Q3 2020. Meanwhile, new condo supply for 2021 could reach 8,200 units, up 143% from the 3,370 units completed in 2020, with the Bay Area and Fort Bonifacio accounting for 97% of new supply.
Malls are starting to welcome more guests and this should also translate to improved retail space absorption and eventual recovery in rents. Vacancy in malls across Metro Manila for Q3 2021 is at 14.8%, which is lower than our year-end forecast of a 16% vacancy in 2021 as some retailers opened physical stores in both regional and superregional malls.
In our view, occupiers should implement flight-for-quality and take advantage of attractive rents; residential developers should reassess their supply pipeline especially in hubs with high secondary market vacancies; while the competitive retail rents should enable tenants to locate in prime locations.