In Q1 2022, the Philippine economy grew 8.3%, a reversal from the 3.8% contraction posted a year ago. This makes the Philippines the fastest-growing economy in the East Asian region during the period. Colliers believes that this level of economic output sets the stage for accelerated GDP growth beyond 2022.
The Philippine economy surprised with an 8.3% growth in Q1 2022, a reversal from the 3.8% contraction posted a year ago. This is faster than many analysts’ projections of 6.7% growth in Q1 2022 and is within the government’s target of between 7% and 9% growth in 2022. This makes the Philippines the fastest-growing economy in the East Asian region during the period.
Colliers believes that this level of economic output sets the stage for accelerated GDP growth beyond 2022. A number of developers, investors, and occupiers took a wait-and-see stance prior to the May 9 national elections. The election of a new set of leaders, along with the continued implementation of pro-property reforms such as accelerated infrastructure construction should guide property firms with their expansion plans over the next three to six years. In our view, developers should continue lining up projects in anticipation of improving investor appetite.
For the office sector, the return-to-office mandates should support the recovery of office space absorption. The improving Covid-19 situation and the passage of economic stimulus measures should boost office space take-up for the remainder of the year.
For the residential sector, we see that the recovery in the leasing market will be driven by local employees starting to work on-site and the gradual return of expatriates. Vehicular traffic in Metro Manila is also returning to pre-Covid-19 levels, which should also urge employees to rent a condominium unit or co-living facility near their offices. Residential demand should also be anchored by an increase in office leasing and an improvement in business confidence.
For the retail sector, vacancy across malls in Metro Manila in Q1 2022 continued to increase albeit at a slower pace. Various business groups reported that malls have reached about 63% of their pre-Covid-19 level. We are optimistic that the de-escalation of Metro Manila to Alert Level 1 and improving vaccination rate should increase consumer traffic and consumer confidence.
Various business groups are eagerly awaiting for the laying out of reforms that the new set of leaders will implement over the next three to six years. These should influence the property sector’s development strategies during the period.