No Slowdown in Sight for POGOs as PH’s Real Estate Market Seen to Expand in 2020
posted January 17, 2020 at 10:13 pm
2019 was a successful year for the Real Estate Industry, and by all indications, 2020 should be another banner year as well.
According to The Lobien Realty Group (LRG), they expect the Philippine Real Estate Market to remain strong and continue its growth trajectory this year despite prevailing global issues. LRG has studied and analyzed the different Real Estate markets in the country and possesses a definite knowledge of the current states of these markets and a clear and significant understanding of the prevailing factors, dynamics, and issues that shape and influence these markets.
The Philippines’ Demography
The Philippines has a population of around 107 million highly literate and industrious people with an average age of 25 years. 61.4% of the Philippine population comprise the labor force and 95% of this young, energetic, tech-savvy, group of workers are currently employed. This demographic combined with government policies, programs, and projects that improve infrastructure, promotes the ease of doing business, spur innovation, and encourage investment is largely responsible for the flourishing Philippine economy which features a GD amounting to USD350B growing at a healthy rate of 6.0%.
POGOs and BPOs Account for Majority of the Office Property Market
Demand in The Office Market continues to be largely driven by POGOs and BPOs. Online Gaming/POGO companies occupy 36% while BPOs occupy 30% of the total office take-up in Metro Manila last year. LRG projects that office space demand by these companies will continue to increase in 2020. The Philippines’ IT-BPM industry is projected to have a potential for a 6% - 7% growth in number of headcount from 2019 – 2022 because of sustained and improved privately initiated upskilling programs combined with government support through PEZA and infrastructure building. Flexible/serviced office spaces are getting popular and are expected to reach 10% growth year on year. The regional heavyweights outside NCR such as Cebu and Davao will continue to prosper and increase their economic activities and the Build Build Build program is expected to help regions outside Metro Manila to develop. As economic development increases throughout the country so does the need for office space. In 2019, 71% of the total office space supply of 1,034,825 sqm in Metro Manila was leased at an average cost of PHP 1160/sqm and only 4.05% vacancy was recorded for office spaces located within Metro Manila’s central business districts.
Fusion of E-Commerce and Physical Malls Seen to Pump Up Retail Real Estate Market
LRG expects that the Retail Real Estate Market will have a total increase of more than 1 million sqm of GFA for shopping malls from 2020 – 2022 across the Philippines as property mall developers remain confident. The rapid and ongoing growth of E-Commerce in the country will lead to a fusion of E-Commerce and physical malls as both these realities are here to stay. Evolution is the key to success for the Retail Real Estate Market as new approaches to retail sales must be explored to complement the rise of E-Commerce.
Tourism Real Estate Predicted to Grow Further
The Tourism Real Estate Market will also grow as foreign tourist arrivals increase every year. Last year, 6.1 million foreign tourist arrivals were recorded as of September, a 14% increase from the same period in 2018. To cope with the demand for rooms, 3500 rooms will be added to the current supply by 2021. In 2019, hotels in Metro Manila had an overall occupancy rate of 74% as of 3Q.
Residential Real Estate to Expand
The Philippines’ Residential Real Estate Market will continue to expand. 376,000 condominium units were completed in Metro Manila as of 4Q 2019 and an additional 15,500 units are expected in 2020. The majority of the condominium units are geared towards the mid-end market and cost PHP 6M – 9M. Prices for residential condominium units are expected to increase by 5-6% yearly from 2020 -2022. LRG expects that high demand from local and foreign nationals will continuously sustain the take-up of residential units.
LRG is looking forward to experiencing a very positive Real Estate Market this 2020. The Philippines continues to grow, develop, and improve as a country and it is encouraging to see change and witness actual infrastructures taking shape. The government is doing its best to create a corruption free bureaucracy dedicated to making business seamless and, with the private sector’s help, cultivate a secure, stable, and competitive business environment conducive to investors. LRG believes that the Philippines is one of the hottest real estate investment spots in Southeast Asia today and, as a company that specializes in real estate investments, LRG has done the research, analyzed the studies and has made the conclusion that anyone looking to invest in real estate should put their money in the Philippines.
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