The Philippine Real Estate Market will continue its growth trajectory this 2020 even if outside (global) factors hound this forceful industry. This is based on the Lobien Realty Group‘s (LRG) study and analysis of different real estate markets in the country and on how they interpret the prevailing factors, dynamics, and issues that shape and influence these spaces.
The Philippines, having a population of around 107 million as of this writing, is composed of highly literate and industrious people with an average age of 25 years. Of this total, 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, promote the ease of doing business, spur innovation, and encourage investment is largely responsible for the flourishing Philippine economy which features a GDP amounting to US$350B growing at a healthy rate of 6.0%.
The demand in the Office Market continues to be largely driven by POGOs (Philippine Offshore Gaming Operators) and BPOs (Business Process Outsourcing). Online Gaming (POGO) companies occupy 36% of this market, 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 the 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 and serviced office spaces are getting popular and are expected to reach a 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 do 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 PHP1,160/sqm and only 4.05% vacancy was recorded for office spaces located within Metro Manila’s central business districts.
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.
“Aside from the POGO, BPO and Call Center markets, the coworking industry is growing and it is growing so fast because there are a lot of companies now who are not open in having a lot of capital expense. This kind of setup is best for companies who just entered the Philippine market and they want to test the water first,” according to Sheila Lobien, Chief Executive Officer of the Lobien Realty Group.
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.
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 PHP6M – PHP9M. 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.
Read more: http://www.turfsitemanila.com/lobien-realty-group-philippine-real-estate-market-to-expand-in-2020/