No ‘smooth sailing’ for the sector, but rebound seen quicker than anticipated
By Jenina P. Ibañez, Reporter
INCREASING overall capital values at main business districts, residential areas, and industrial zones indicate early signs of Philippine real estate recovery, Leechiu Property Consultants (LPC) Chief Executive Officer David T. Leechiu said.
A recent Bonifacio Global City (BGC) property sale is at “record value for the Philippines,” the real estate services firm said in a statement on Monday. The firm noted a 12% increase between a lot sale in the area in December 2020 compared with 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,” LPC said.
In office property, LPC indicated that Philippine offshore gaming operators (POGO) and business process outsourcing (BPO) could still lead to real estate recovery.
Outsourcing firms are expanding to business districts outside Metro Manila as Western firms outsource to cut costs, and a Supreme Court order preventing new franchise taxes on POGOs is slowing down the segment’s exodus, the company said.
“They are likely to resume operations once the gaming firms and government agencies come to a solution.”
The POGO exodus last year pulled down office space demand by 74% in the first half.
Noting historical trends, LPC said that prices had increased in the years following the 2008 global financial crisis, rising by 20% in 2010 then by 50% in 2012 in areas like BGC.
“We are projecting a similar growth effect for post-pandemic years especially in the core markets,” LPC Associate Director Tam Angel said.
The company is also optimistic that the government infrastructure program, including the construction of new airports and roads, would raise land values for areas made more accessible for travel.
Mr. Leechiu said that the residential activity may recover if the coronavirus disease 2019 (COVID-19) vaccine roll out builds consumer confidence.
This year will not be “smooth sailing” for the real estate sector, he said, but recovery may be quicker than anticipated.
“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.