Philippine Property Market Showing Early Signs of Rebound
The Philippine real estate market could recover faster than expected as it is already seeing signs of improvement, a property services firm said.
In a statement, Leechiu Property Consultants president and CEO David Leechiu said 2021 would not be all smooth sailing.
“But we will recover faster than expected due to a confluence of factors ranging from sustained BPO expansion, a low interest rate environment for the Filipino home buyer and easier access to work and tourism sites due to the massive injection of infrastructure,” he said.
“An even bigger bonus could be the possible resurgence of the POGO (Philippine offshore gaming operator) sector,” Leechui said.
He said one indication that the worst is over include the recent sale of a Bonifacio Global City property at a record value. He added that the BGC lot sale in December was 12 percent higher than the last recorded transaction in 2019.
“The 2020 pre-sales of residential developers and a 2021 pipeline demand of 300,000 square meters for office space further confirmed that things are looking up once again across the industry segments,” Leechiu said.
He said earlier that take-up in the country’s office market is projected to hit around 400,000 sqm to as high as 600,000 sqm this year, with a pipeline of 300,000 sqm that want to get transacted in the early part of 2021.
Meanwhile, Leechiu said a recent Supreme Court order preventing the imposition of new taxes on POGOs has slowed down the online gaming firms’ exodus.
“They are likely to resume operations once the gaming firms and government agencies come to a solution,” he said.
LPC associate director Tam Angel said the firm is projecting a growth effect for land value for the post-pandemic years similar to the years following the 2008 financial crisis.
Tam pointed out that while land prices flattened in 2009 following the 2008 financial crisis, values surged the following years. Prices rose by 20 percent in 2010, 30 percent in 2011 and 50 percent in 2012 in core markets like BGC.
“We are projecting a similar growth effect for post-pandemic years especially in the core markets,” he said.
LPC Associate director Mikko Barranda explained that another condition that would boost the market is the projected expansion of BPOs in business districts within and outside of Metro Manila.
As many US and European markets are currently experiencing their third and fourth COVID waves, LPC said companies in the West are likely by the second quarter to have opted to outsource some functions to India and the Philippines as a means of cost cutting.
“This is how they behaved in 2008 and likely to behave in the next few months,” Barranda said.
Leechiu also expressed optimism that the residential segment would ride the wave of consumer confidence now being boosted by news of vaccine availability worldwide.
He added that in key US markets, residential activity was heightening in anticipation of the vaccines which have started to roll out. Leechiu said the same is expected to happen in the Philippines once doses begin to be widely administered.
In addition, LPC said government borrowings of 10-year and 25-year money at record low rates should lead to a mortgage market that would lower interest fees over 10 years from the current nine percent to 11 percent.
“This would be a game-changer for the Philippine real estate residential sector as it would make housing more affordable for the lower and middle income sectors and likewise create a housing boom for many years to come,” LPC said.
Moreover, over the longer term, LPC forecasts that the massive rollout of 146.7 kilometers of Philippine infrastructure in the next 18 months would widely boost business productivity, tourism and the economy in general.