The Philippine property market is poised for a rebound in 2022. The improving vaccination rate complemented by rising consumer and business confidence should inject a much-needed boost to the sector. Office developers should continue lining up projects while tenants should prepare for a return to office and look at the viability of opening office in core locations. Residential developers should launch new projects in anticipation of pent-up demand. Mall operators should be mindful of sizes of new retail outlets to open in the next 12–24 months given Filipinos’ rising propensity to shop online.
Colliers released its Philippine property market outlook for 2022. In this report, Colliers forecasts the recovery of the real estate sector beyond on the back of improving vaccination rate complemented by rising consumer and business confidence and government-projected economic recovery.
In the first 9 months of 2021, Colliers recorded 302,600 square meters of office deals, up a decent 2% from the 295,800 square meters recorded in the same period in 2020. Traditional occupiers (or non–business process outsourcing firms) covered 61% of the total transactions from January to September of this year. Colliers also predicts that the adoption of sustainable office spaces will play a crucial role in future-proofing office towers beyond 2022.
The completion of major infrastructure projects, such as the NLEX–SLEX Connector, North–South Commuter Railway, and the Central Luzon Link Expressway, will likely benefit key provinces in Northern-Central Luzon, including Pampanga and Bulacan. A number of township developments in Northern-Central Luzon corridor are already underway, including Rockwell Land’s Nepo Center in Angeles, Pampanga, which will feature mid-rise residential condominiums and a Power Plant Mall; and Megaworld’s Northwin Global City in Marilao, Bulacan, which will feature high-rise residential condominiums, shophouses, office buildings, hotels, schools, and mall.
Colliers observed that developers have been cautious in completing new malls and this was evident in 2020 when only 53,100 square meters of new space was completed. This is significantly lower than the annual average of about 323,200 square meters of new retail space from 2017 to 2019. For 2022, Colliers forecasts vacancy in the retail sector rising to about 17%, partially due to the substantial new supply of about 523,700 square meters likely to be delivered and tepid demand because of the changeable lockdown situation in Metro Manila. Colliers recommends that retailers expand their e-commerce presence and maximize technological advantages.
Because of global travel restrictions brought about by the pandemic, the share of tourism to GDP has significantly declined to mostly below 5% in 2020. Colliers believes that recovery in the leisure sector will likely be anchored by domestic tourism; the Department of Tourism (DOT) is expecting domestic trips to reach 84.8 million in 2022 or 90% of the total number of domestic trips in 2019. Revenge travel among local travelers should also help increase occupancies of selected hotels across the country.
Colliers believes that the growth of industrial sector beyond 2021 will likely be driven by sustained demand in e-commerce, logistics, and manufacturing across the country. In H1 2021, industrial vacancy in the Cavite–Laguna–Batangas (CALABA) corridor slid marginally to 5.6% from 5.7% in H2 2020. This can be attributed to the increased demand for warehouse and storage space among e-commerce and FMCG (Fast Moving Consumer Goods) firms as online shopping continues to grow.
Colliers believes that developers can further capture the rising opportunities in the industrial sector by refurbishing existing warehouse facilities. Developers are encouraged to utilize advanced-technology such as facility automation, artificial intelligence (AI) systems, and cloud-managed IT solutions.