The coronavirus pandemic dampened real estate deals in the first six months, as the office take-up dropped 57 percent from a year ago, according to consultancy firm Colliers International Philippines.
Colliers said in its latest property market overview the demand-supply imbalance would result in higher vacancy rate in Metro Manila.
“Practically we have a double whammy for the office market, and for 2020, by most optimistic view, is that vacancy will increase to 5.3 percent higher than what we had in 2018 which was 4.3 percent,” said Colliers senior research manager Joey Bondoc.
Colliers said office space take-up of voice and knowledge process outsourcing dropped 54 percent to 91,000 square meters in the first six months from 197,000 sqm in the same period last year.
The take-up of traditional transactions also decreased 66 percent to 91,000 sq.m. from 264,000 sqm, while gaming posted the biggest drop of 71 percent to 79,000 sq. m. from 268,000 sq. m.
It said that for regular transactions, take-up declined 64 percent from 2019.
New supply of office space in Metro Manila reverted back to pre-POGO (Philippine offshore gaming operators) levels of about 530,000 sq. m., down from the estimated 1.07 million sq. m. space in 2019.
Muted or stalled transactions in the second quarter involved 8,000 sq. m. in the fringes of Ortigas; 33,000 sq. m. in Makati central business district; 5,000 sqm in the Bay Area; 54,000 sq. m. in Alabang; 24,000 sqm in Quezon City; 30,000 sq. m. in Ortigas business district; and 36,000 sq. m. in Fort Bonifacio.
Completions were also down in the second quarter amid soft demand from POGOs. Only one building was completed with 57,000 sq. m. of leasable area in Ortigas.
Colliers said that despite the dull demand from POGOs and the BPO industries, traditional companies kept the property sector together.
“The gaming segment still accounts for 30 percent of the transactions recorded in the first half of the year. But you have to note that these transactions covered pre-leasing during the first few months of 2020. The challenge is will they have new employees for the remainder of 2020. We have to note that travel restrictions to and from China has been constricting these companies to expand and employ Chinese POGO employees,” Bondoc said.
Bondoc said while the Philippines is not yet a big player in the flexible working space segment, the pandemic might increase the use of co-working facilities to 3.5 percent from 2.5 percent.
“This lockdown has compelled us to implement a big work-from-home experiment, but what companies realize is that this is an opportunity for them to rationalize their real estate needs. While they still have their major headquarters, they are looking to occupy smaller spaces in non-core locations, outside of the major business districts,” he said.