The worst is over for the Philippine property sector that was battered badly by the disruptions caused by the COVID-19 pandemic and the consequent lockdowns last year.
This is according to Leechiu Property Consultants, Inc. (LPC) CEO David Leechiu, who said the Philippines real estate sector was showing early signs of recovery.
One proof of this nascent recovery is a recent Bonifacio Global City (BGC) property sale “at record value for the Philippines,” and the continued increase in the overall capital values in the main business districts, prime residential and industrial areas, the LPC chief said. Leechiu noted that the BGC lot sale in December fetched a valuation that was 12 percent higher than the last recorded transaction in 2019.
The 2020 presales 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, he said.
Meanwhile, a recent Supreme Court order preventing the imposition of new taxes on Philippine Online Gaming Operators (POGOs) has slowed down the POGO exodus. They are seen to resume operations once the gaming firms and government agencies find a middle ground.
LPC projects a newfound optimism or even market euphoria in the next 12-18 months that could reward real estate investors. LPC associate director Tam Angel recalled that while land prices flattened in 2009 following the 2008 financial crisis, values surged in the following years.
Philippine real estate 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 added that another condition that would boost the market would be the projected expansion of business process outsourcing (BPO) firms in business districts within and outside Metro Manila.
With many US and European markets currently experiencing their third and fourth waves of COVID infection, Western companies are likely to turn to outsourcing some business functions to India and the Philippines to cut costs. “This is how they behaved in 2008 and likely to behave in the next few months,” said Barranda.
Leechiu is equally optimistic that the residential segment would ride the wave of consumer confidence catalyzed by the rollout of the COVID-19 vaccine.
He noted that in key US markets, residential activity was surging in anticipation of widespread vaccine distribution. He predicted that the same would happen in the Philippines once doses of vaccine begin to be widely administered. In a related development, record-low government borrowings of 10-year and 25-year money are seen to lead to a mortgage market that would lower interest fees.
This was cited as a potential game-changer for the Philippine 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. Over the longer term, the LPC research projected 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. In Metro Manila, the opening of projects like Skyway Stage 3—which now allows travel from Alabang to Balintawak in 25 to 30 minutes—would strengthen business confidence and raise land values in areas suddenly accessible to key districts of the metropolis.
Leechiu qualified that 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, easier access to work and tourism sites due to the massive injection of infrastructure. An even bigger bonus could be the possible resurgence of the POGO sector,” he said.
By: Doris Dumlao-Abadilla – Reporter / Philippine Daily Inquirer / February 02, 2021