Cushman & Wakefield: Philippine Real Estate Set for Growth

Cushman & Wakefield, a prominent real estate services firm, has projected a promising investment outlook for the Philippine real estate sector despite global economic challenges.

In a recent statement, Cushman & Wakefield highlighted the country's buoyant economic prospects compared to other markets. The firm cited the 2024 Global Cities Index by Oxford Economics, which features nine Philippine cities among the top 1,000 global urban economies. Notably, Manila ranked 256th, Cebu 436th, and Cagayan de Oro and Davao City placed 487th and 500th, respectively.

The firm emphasized that improving regulatory policies and governance would enhance the Philippines' attractiveness to foreign investors, particularly in regions poised to become new business process outsourcing hubs.

In the hospitality sector, Cushman & Wakefield identified digitalization and experiential travel as key trends driving tourism growth. The Philippines' young and urbanizing demographic is expected to support sustained demand in the residential sector, fostering inclusive economic development.

Trip.com, a Singapore-based travel booking service, reported a 54% increase in hotel bookings in the Philippines during the first quarter of 2024, driven by "impulse travel" influenced by social media. The Department of Tourism recorded 447,400 visitor arrivals in May 2024.

The report also stressed the importance of infrastructure development to attract manufacturing companies looking to reshore and diversify their operations, which would boost demand for industrial space.

However, the report noted that household spending is dampened by a slowdown in remittance inflows, which grew by 4.6% year-on-year in March, down from 5.3% in February. Global retailers' demand is expected to remain weak amid persistent global economic uncertainty.

Optimism in the Hospitality Sector

Philippine hotel owners and operators remain optimistic about the hospitality industry's growth but express concerns about infrastructure limitations and untapped workforce potential. According to the Philippine Hotel Investment Outlook Survey, 89% of hotel owners and operators are optimistic about medium-term prospects, with 95% expecting favorable conditions for the industry over the next three years.

At the Philippine Tourism and Hotel Investment Summit, George C. Aquino, CEO of Ayala Land Hotels and Resorts Corp., highlighted the sector's growth potential, anticipating a steady increase in tourist arrivals over the next five years. Department of Tourism (DoT) Secretary Christina G. Frasco reported that domestic tourism expenditure reached PHP2.67 trillion in 2023, while inbound tourism expenditure hit PHP697.46 billion, comparable to 2019 levels. Total tourist receipts increased by 47.9% to PHP2.09 trillion, with tourism investment totaling PHP509 billion.

Filinvest Hospitality Corp. Senior Vice-President Francis Gotianun expressed optimism about tourism growth and infrastructure development, particularly advancements at Clark International Airport and Bohol-Panglao International Airport. Robinsons Hotels and Resorts (RHR) Senior Vice-President Barun Jolly emphasized the potential of untapped municipalities and cities, advocating for localized hotel experiences that offer unique and distinctive attractions.

Cleofe Albiso, managing director at Megaworld Hotels and Resorts, cited the closure of Boracay as a cautionary example, suggesting similar considerations for developing other areas like Palawan.

Addressing the Room Gap

Philippine Hotel Owners Association (PHOA) President Arthur M. Lopez stated that the country needs to build 80,000 additional rooms to compete with regional hotels in Asia. Tourism Infrastructure and Enterprise Zone Authority (TIEZA) Assistant Chief Operating Officer Karen Mae Sarinas-Baydo acknowledged this room gap and noted that TIEZA has properties available for investment and is renovating sites like the Banaue Hotel.

George C. Aquino stressed the importance of infrastructure and public-private partnerships in realizing development plans. Secretary Frasco announced that the Philippine Hotel Industry Strategic Action Plan, set to launch soon, will establish a framework for hotel infrastructure expansion and address current challenges. The plan will focus on soft infrastructure, skill matching, digitalization, competitiveness, and resilience against external shocks.