Why the Philippine real estate should be on your radar this year

Strong U.S. dollar, favourable rates, and promising developer terms are among the top reasons why the island country is poised to become an investment hotspot

Within just a couple of years, the pandemic has completely altered the landscape of the Philippine real estate sector. Real estate players found themselves in an unprecedented situation, where they had to reevaluate their strategies and revise years-old operations to adapt to the movement restrictions. 

Yet despite doing a complete one-eighty, the industry has remained resilient in their drive to produce top quality developments for users, no matter the challenges that come with the current environment.  

Now as the country has ramped up its vaccine rollout and the borders have started to open, the optimism in the sector is more apparent than over. 

In fact, Goldman Sachs told Inquirer.Net that the property sector in the Philippines is sensitive to economic growth and they expect the island country to record the fastest growth in gross domestic product (GDP) at 7.3 percent among the ASEAN 5 (including Indonesia, Malaysia, Singapore, and Thailand) in 2022. 

At present, analysts have already witnessed green shoots of recovery across all segments of the industry, indicating a potential hotspot for investment opportunities and denoting a bright future for leading real estate players, namely the PropertyGuru Philippines Property Award-winning developers SM Development Corporation (SMDC), Cebu Landmasters, Inc., Aboitiz InfraCapital, Inc. (Integrated Economic Centers), PIK, Worldwide Central Properties, Inc., and Aboitiz Land. 

Residential segment poised for an upswing 

According to the Global Buyer Survey by Santos Knight Frank, the demand for residential developments, particularly condominiums in Metro Manila, will increase in 2022 as employees start to return to the office.  

As for wealthy homebuyers, the firm revealed that the demand has remained strong for low-density residential spaces. These high-income investors also shared their plans to invest in second homes, adding their preference towards either house and lots or suburban homes. 

Office market to stage a comeback  

The Philippine News Agency reported that the IT-BPM businesses will propel the growth of the Philippine office sector this year. Mikko Barranda, director for commercial leasing at LPC, said his firm expects increase in transactions since key stakeholders from overseas can now travel to the country. 

More: Fully vaccinated tourists welcome to travel to the Philippines starting 10 February

“Office contractions remain at their lowest. We are seeing tenants renew leases in anticipation of recovery,” shared Barranda. 

Even if employees will be following the hybrid work set up, LPC is optimistic that offices and central business districts will remain as key economic centres, especially since the line of work values workspaces that come with backup systems in case of power and connection disruptions or system downtime. 

Santos Knight Frank also forecasts a net positive impact on office leasing demand in 2022 as firms start to contemplate whether they should adopt the Hub & Spoke model, which involves moving offices closer to employees. 

“The office is transforming from a place you ‘need to go’ to a place you ‘want to go’. This has important implications on how organisations will be selecting their new office spaces, implementing return-to-office programs, and reconfiguring their workplaces,” added Morgan McGilvray, senior director of occupier solutions & services at Santos Knight Frank. 

“Occupiers are not just looking for strategically located and cost-effective real estate, but also quality options that appeal to their employees.” 

Data centres on the rise 

Reliance on technology has grown substantially in the Covid-period as businesses moved their operations online which, in turn, led to the rapid growth of the data centre industry. Santos Knight Frank said that the rise in demand for cloud, co-location, and internet prompted the need for in-country based facilities. 

More: The Philippines’ office sector preps for hybrid work scheme post-pandemic

Although before the outbreak, operators have had their eye on the country because of the high digital consumption of the locals. Hootsuite uncovered that the country’s internet and social media users surged by 6.1 percent in 2020 and 22 percent in 2021. 

At present, the Philippines is capable of 94 MW IT supply, but operators are planning to construct additional 125 MW capacity this year. 

“The Data Centre market is an exciting space for the Philippines. As the Data Centre sector continues to grow alongside the increasing demand for data, we expect to see an upswing in activity for Data Centre investments into the country,” said Monica Gonzalez, Santos Knight Frank’s data centres lead and manager for occupier solutions & services. 

The Philippines was among Live and Invest Overseas’ Six Best International Investment Property Markets for 2022, chosen for its “spectacular beaches, inexpensive real estate prices, and a welcoming and friendly population.” The editors also highlighted the strong U.S. dollar, favourable rates, and promising developer terms as main selling points on why this country should be on your radar. 

Have you heard of any outstanding residential, commercial, or industrial projects in the Philippines? Nominate them for the 10th annual PropertyGuru Philippines Property Awards on or before 5 August 2022. To know more, visit asiapropertyawards.com/award/philippines/. 

Gynen Kyra Toriano, Digital Content Manager at PropertyGuru, wrote this article. For more information, email: [email protected].