A real estate services company said Tuesday the property sector is on track to post a major rebound in the next three years under the Marcos administration.
“The Philippines’ property sector is likely to see a significant recovery in the next two to three years into the administration of President Ferdinand Romualdez Marcos Jr. as demand returns on both commercial and residential property,” Santos Knight Frank said.
It said with the government’s return-to-office order to business process outsourcing companies, the office space market would likely see an increase in activity in the second half.
“Second quarter was the first quarter for many employees to return to the office. With that, we also saw an increase in leasing activity for the first time in a while,” Santos Knight Frank senior director for occupier strategy and solutions Morgan McGilvray said in a news briefing.
Vacancy rate remained high at 23 percent in the second quarter, as 228,500 square meters of office space were added to the Metro Manila market during the period.
“The Philippines, as with India, South Korea, Singapore and most of Asia, is likely to see a greater rate of RTO for employees than the rate in developed Western economies. RTO in the Philippines is a result of both the office culture and the needs of its BPO occupiers,” Santos Knight Frank said.
It said the high vacancy rate could be a combination of some move outs among tenants, along with the completion of new buildings.
“It’s very natural for the vacancy to go up,” said SKF senior director for occupier services and commercial agency Morgan McGilvray.
The consultancy firm said despite the increase in vacancies, there was a slight uptick in the average lease rates in Metro Manila.
“This is a pretty modest increase, but it is representing a bit of a turnaround as compared to the many quarters prior in which we continue to see rental rates decrease,” Mcgilvray said.
He said this trend would likely continue, albeit slowly, as more businesses continued to reopen and demand for office space would be in the upswing in the coming months.
Santos Knight Frank predicted that office supply would increase to a healthy 600,000 sq. m. in 2023, with more supply coming up in 2024 and 2025.
It said that of the total, about 35 percent to 40 percent would come up in Taguig City, particularly the central business development called Arca South. This will add to the ongoing developments in Bonifacio Global City. The next biggest markets will be Quezon City, Ortigas and the Bay Area.
Meanwhile, SKF said there was a slow but steady rebound of the brick-and-mortar retail sector on several factors such as the easing of travel restrictions, pent-up demand for consumption, high vaccination rates and the return-to-office trend.
The firm said food and beverage and clothing apparel accounted for 32.7 percent and 32.1 percent, respectively, of all upcoming stores in Metro Manila’s retail sector. The average retail lease rate of P1,567 per square meter remained 4.4 percent below the pre-pandemic level in the fourth quarter of 2019.
SKF is also actively tracking a total of 220 megawatts (MW) worth of expressed interest for the data center sector, with 90 MW recorded in the second quarter of 2022 alone.
The company projects that the existing 94 MW total IT capacity of data centers will likely double in the next 2 to 3 years.
SKF predicts that the Philippines’ property sector is likely to see significant recovery in the next 2 to 3 years into the administration of President Ferdinand Romualdez Marcos, Jr., as demand returns on both commercial and residential property.
