A positive outlook for the Philippines in 2023

Santos Knight Frank uncovers opportunities and growth of the country’s markets

Real estate services firm Santos Knight Frank forecasted an optimistic outlook for Philippine property in 2023 as a continuation of its strong performance towards the end of 2022. Due to the country’s resilient and stable economy, with support from the growth of OFW remittances and household spending, multiple industries are set to accelerate in recovery. 

Retail and hospitality are among the fastest sectors to recover with the demand for retail space and the 93 percent mall occupancy level. This is also supported by the 2.65 million international tourists arriving in the Philippines in the previous year. Retail increased alongside hotel construction developments, with the latter’s growth leading to a growth in consumption. This would then spill over to the growth in the industry sector where the capital Manila is expected to experience the highest lease growth rate in Southeast Asia at 15 percent.

The Philippines is expected to have a total of 2,692 new hotel rooms in Metro Manila by 2024. The Philippine News Agency reported that this development will help with the amount of tourists who are expected to have their “revenge travel,” especially with the return of face-to-face events this year. The Department of Tourism will be further encouraging tourist visits until the end of the year, expecting 4.8 million international visitors.

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In terms of local retail, the office retail sector is predicted to continue its adjustment to suit the hybrid work from home setup as 452 registered businesses endorsed 1,325 IT-BPM projects to the Philippine Board of Investments and the Philippine Economic Zone Authority (PEZA). Business Process Outsourcing tenants will not be restricted to PEZA-accredited buildings for office space.

Companies looking for offices would be looking further into occupying green buildings, as seen in LEED-certified office buildings registering 11 percent vacancy with a PHP1,090 (USD19.85) monthly lease rate compared to the 24 percent vacancy in non-LEED buildings with a PHP942 monthly lease rate.

Alongside the recovery of multiple markets, Santos Knight Frank also noted that the Philippines will be in a better position to attract foreign investments. Foreign companies will be willing to do so because of their confidence in the administration of President Ferdinand Marcos Jr, who has generated PHP1.3 trillion investment pledges in his first nine months at the Office.