CONFIDENCE IN REAL ESTATE

The continued improvement in COVID-19 numbers and the opening up of the economy and travel will lead to stronger residential condominium sales.

There is still a large unserved market for residential units in the Philippines. This market will continue to fuel the growth and resiliency of the residential sector. Bumps in the market can be expected as we have seen dips in reservation sales every time lockdowns occur.

For the office sector, business process outsourcing companies (BPOs) will continue to expand not only in Metro Manila but also in the countryside. We will encounter new brands from captives looking to offshore and outsource in the Philippines for the first time.

Other than BPOs, online retail companies or e-commerce will continue to drive growth and expand both office and industrial requirements. We also see demand for industrial and warehousing surge to meet logistics requirements.

Another subsector that will drive demand in the Philippines will be data centers. This is due to data privacy issues in other countries.

Strong REIT support

The successful real estate investment trust (REIT) launches show the resiliency of the Philippine office market.

Despite the global pandemic, majority of the assets in the REIT

portfolios of listed developers were able to maintain high occupancy rates of above 90 percent, and very few contractions, if any. This provided confidence in the real estate sector especially to the retail and institutional investors who have supported the multiple REIT launches.

Such REITs give the average investor the opportunity to invest in income-generating assets with consistent dividend payouts, and the ability to liquidate quickly. As such, these have already created P260 billion in

value in the stock market.

Significant recovery

As the government and the public get more confident, we may be looking at a significant recovery starting second or third quarter of 2022.

As soon as the country moved to Alert level 2, we saw the population go back to the malls and restaurants to spend. We are a consumption-based economy and the household savings generated in the last two years of on-and-off lockdowns may soon be unleashed into the retail arena causing sudden economic improvement.

For the office sector, we see demand forecast for full year 2021 to hit 450,000 sqm to 500,000 sqm, a 20 percent increase from the 2020 figure. The office market recovery we are seeing will provide positive support to an increase in capital values, as pent up or undeployed capital due to the uncertainty caused by the pandemic needs to be invested.

Trends amid the pandemic

Because safety, convenience and wellness became consumer priorities, townships and self-sustained mixed-use complexes have become more attractive along with open areas, parks and green spaces.

Residential condominium units offering larger spaces and health-positioned amenities have also become more desirable. Retail areas have adjusted to pandemic-triggered consumer wishes and now include open air or al fresco dining.

The pandemic has put the spotlight on second home residential resorts in the beaches or mountains outside of the city. It introduced the novelty of living in open and unpolluted spaces. Moreover, infrastructure development allowed for shorter and faster travel times from places of work or cities to spaces outside the metro.

The pandemic may be temporary but the learnings they triggered have permanence. Low density residential mixed-use projects will rise in higher frequency in the outskirts of Metro Manila especially along areas now closer to the metro because of new infrastructure.