News roundup: Philippines office market performance exceed 2023 expectations, and other headlines

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For PropertyGuru’s real estate news roundup, the Philippines’ Manila office market performed better than expected in 2023. In other headlines, Vietnam will introduce a number of regulations to strictly manage real estate brokerage activities, while commercial real estate investment in Asia Pacific rose 3 percent in Q4 2023, reversing seven consecutive quarters of decreasing volumes.

Expansions, upgrades fuel Manila office market

The Philippines’ Metro Manila office market performed better than expected in 2023 compared to initial projections. Net take-up in 2023 more than doubled compared to the previous year, with transactions continuing to outpace lease surrenders. Despite new supply driving its marginal increase, the vacancy posted as of the end 2023 has averted the 20 percent level. Colliers continues to note deals from traditional and outsourcing firms implementing a mix of flight-to-quality and flight-to-cost measures. The office market has also seen more expansions (50 percent of transactions) and new entrants (10 percent of transactions).

As of the end of 2023, office space deals across Metro Manila reached 827,700 square metres, up 37 percent from the 603,800 sq.m. recorded a year ago. This figure is already more than half the 1.5 million sq.m. recorded pre-COVID or in 2019. Traditional firms led transactions, accounting for 46 percent of the total while outsourcing and Philippine Offshore Gaming Operator (POGO) firms cornered 34 percent and 20 percent, respectively.

The Bay Area, Quezon City, and Makati central business district (CBD) dominated in terms of transactions in 2023, accounting for more than half of the total transactions in the capital region. Among the notable deals in Q4 2023 include spaces occupied by Samsung in Fort Bonifacio, Foundever in Ortigas Fringe, Optum in Makati CBD, and Fluor in Alabang. Colliers has also observed substantial deals from POGO firms especially in the Bay Area.

According to a BusinessWorld report, Colliers encourages occupiers to continue taking advantage of the current market conditions and investing in modern workspaces for the benefit of their employees. With sustainability now becoming a minimum requirement, landlords are encouraged to incorporate green features and secure certifications in both existing and future developments. Some landlords with presence in better performing submarkets may consider building more high-quality and green spaces to capture future demand.

Management of real estate brokers in Vietnam to be tightened

Only 40,000 out of about 100,000 individual brokers in the domestic real estate market have brokerage practising certificates, according to the Vietnam Association of Real Estate Brokers (VARS). The remaining are freelancers or do this as a second job without training or the right credentials.

Brokerage activities are not managed closely and it is still a job with almost no barriers when the individuals do brokerage activities or stop doing this work, according to the VARS as reported in VietnamPlus.

The amended Real Estate Business Law 2023 that takes effect from 1st January, 2025, has many regulations to manage strictly real estate brokerage activities.

Article 61 of this law stipulates that individuals practising real estate brokerage must have certificates and work for enterprises providing real estate trading floor services or real estate brokerage services. It means that individuals will not be allowed to do independent real estate brokerage activities as currently, VARS said.

Asia Pacific commercial property investment upticks 3 percent in Q4

According to new data by global real estate consulting firm JLL reported by The World Property Journal, commercial real estate investment in Asia Pacific rose 3 percent year-on-year (YoY) in Q4 2023 to USD31.6 billion, reversing seven consecutive quarters of decreasing volumes. Overall annual investment across the region declined by 17 percent YoY to USD106.8 billion in 2023.

China stood at the forefront of Asia Pacific’s investment rebound for the second consecutive quarter, recording a 50 percent YoY increase in volume to USD11.1 billion. Meanwhile, sectors such as logistics (down -5 percent to USD6.5 billion) and living (up 24 percent to USD1.5 billion) performed better than other sectors, especially in China. Investments in office, down 13 percent YoY to USD13.7 billion, continued to contract amid uncertainties on interest rate movements, the extent of re-pricing and occupancy.

“While the cost of debt remains elevated, investors across Asia Pacific are still erring on the side of caution. The prospect of interest rate cuts in 2024 may potentially reverse current trends, but we can expect greater sector diversification among investors – particularly towards sectors such as logistics and industrial and living, which have seen high investor conviction across the region,” said Stuart Crow, CEO, Asia Pacific Capital Markets, JLL.

The Property Report editors wrote this article. For more information, email: [email protected].