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A real estate services company believes that the office segment, the residential sector and tourism will enjoy strong growth from the opportunities brought about by “a multitude of global headwinds” including global inflation and rising interest rates
David Leechiu, CEO of Leechiu Property Consultants (LPC) said the continued expansion of the IT-BPM sector will likely drive office demand close to the 2016 level of 647k sqm., prior to the entry of the POGO sector which drove demand to record peaks from 2017 to 2019, according to LPC studies.
The IT-BPM sector now accounts for 1.4 million jobs, making it the country’s largest employer. In the “crisis year” of 2021, as many as 120,000 outsourcing jobs were created as a response to financial uncertainties in the West indicating that the trend of increasing IT-BPM employment will continue as economic challenges prevail worldwide.
This position is further supported by current live requirements for transactions in various stages of negotiation which has so far been the highest since the start of the pandemic at 451k sqm. as of Q2 2022. IT-BPMs account for 212k sqm. of the total.
These numbers are bound to gain fresh impetus given the new Marcos administration’s perceived determination to return to business as usual and its reluctance to imposing new lockdowns, said Leechiu. As of Q2 2022, actual office absorption was already at 255k sqm., the highest since the start of the pandemic.
For the residential condominium sector, the current administration’s assurance of unhampered mobility and continuous operations will prompt higher activity levels. The take-up
in Q2 2022 was at 9,030 units or already 70% of pre-COVID levels, thanks to stretched down payments for amortization and other concessions offered by developers, said an LPC study.
Moreover, higher construction costs and market uncertainties will prompt developers to offer even better payment terms to buyers in an effort to reduce inventory further and to pave the way for new launches. “Investors and buyers would be wise to grab this opportunity to lock down the price today and to pay interest-free downpayment over a period of up to 4 to 5 years. They will be highly rewarded in the recovery a few years from now,” he said.
In his State of the Nation Address, President Ferdinand “Bongbong” Marcos (PBBM) disclosed that he aimed to spend 5% of the country’s Gross Domestic Product on improving roads and transportation systems in key cities, a continuation of the previous administration’s Build, Build, Build initiative.
These infrastructure projects have increased accessibility from Metro Manila to Southern Mega Manila and other areas. Land values have been increasing in the surrounding communities with residential lots in Cavite and Laguna rising by 7%-15% annually. Continuation of these infrastructure projects, assured by PBBM’s unrivalled political capital, will further prompt residential developers to launch more products.
These infrastructure projects – which also include airports and seaports that will improve access to tourist destinations—will likewise spur tourism, likely to be the largest industry in the Philippines in 10 years. The opening of seven new airport projects alone at the end of 2021 resulted to an increase of 16.7 million in annual passenger capacity, disclosed LPC studies. There is also a potential 7 times increase in annual passenger capacity of projects in the pipeline to 386 million passengers per year from the current 55 million passengers per year.
Leechiu further stated that the Philippines is likely to benefit from the current trend of foreign travelers seeking cheaper tourism in the face of rising inflation worldwide. Travelers from North and East Asia, especially the middle-class populations of Japan, South Korea, Taiwan and Hong Kong will be nearer to the Philippines via Clark International Airport. Whereas the Mactan
International Airport will bring the country closer to Southern Asian countries such as Indonesia, Vietnam, Singapore, and Malaysia.
Travel through Clark then to the preferred Philippines destinations, namely Cebu, Boracay, Bohol, Palawan, Siargao, Davao, La Union, and Ilocos Norte, will change the tourist experience positively.
Leechiu said: “Real estate has always been considered one of the safest assets for capital preservation in times of economic uncertainty.” Amidst the string of crises experienced over the past decades, he cited investments in residential lots in the high-end gated subdivisions in Metro Manila proving to be excellent stores of value.