The best is yet to come when it comes to the real estate market in the Philippines. Against the backdrop of resilient economic growth, the country’s real estate scene is expected to show off more color as new trends arise.
The economic stability of the country is a must for the real estate sector to flourish. According to Lamudi Real Estate Market Report for 2017, the country needs to be able to maintain the momentum of economic growth to lure in foreign investments and maintain its credential.
The report noted that Metro Manila’s placement in terms of investment prospect has shifted dramatically. Quoting PwC, Lamudi said Metro Manila has moved up the ranks, sitting as the third most promising city for investment in the Asia Pacific region, even ahead of established markets like Sydney, Hong Kong, and Singapore.
Additionally, the flourishing technology is expected to change the landscape on how property seekers access information regarding real estate developments. Developers will be able to leverage on different technologies like virtual reality, chatbots, and social media to further enhance their reach and presence, allowing for more interactive engagements with the hungry property hunters.
There are things to expect, however, in the Philippines real estate scene this year. As the year continues to unfold, here are five things you should definitely be on the lookout for.
- Condominium living will spur demand for home furnishings
Condominium living is expected to thrive in the midst of increasing home seekers wanting to get a hold on their dream houses. In terms of attractiveness, the location of a property will still play a big part, as well as affordability.
Condominium projects in Metro Manila will still attract people who want immediate access to business firms, malls, hospitals, and government agencies. Add to that the worsening metropolitan traffic, urging workers to avail of spaces within CBDs for the sake of convenience.
Couple that with growing spending power of home-seekers, condominium living is foreseen to drive demand for home furnishings. The dominance of middle class has lured foreign names like Crate & Barrel and Pottery Barn to set up shops in the country, in addition to local players including SM’s MyHome, Dimensione, and others.
However, do not be so surprised if these home-seekers start to veer away from key mainstream CBDs to dodge skyrocketing costs of living. Residential developments in nearby provinces like Rizal, Bulacan, Laguna, and Pampanga will surely be a compromise in terms of location, but the affordability of housing units in these regions will attract a huge number of home seekers.
More so, the residential sector should be wary of the thinning supply of construction workers as these might delay completion schedule of some major developments. Consequently, this would result in the anemic supply of units for the next years to come.
- Millennials will shape how the retail sector will work
Filipino millennials’ dominance in the workforce is vital in terms of how retail players will be able to adapt to the changing landscape of the sector. With the rise of shared economy services like Grab and Uber, as well as the surge in demand for e-commerce sites such as Lazada and Zalora, retail players have to up their game to continue attracting footfalls from the millennial generation.
In this case, developers have their work cut out for them as they try to win the finicky millennials. They may have to shift their focus on lifestyle-focused malls, with spaces where millennials can hang out and chill, not just put up cookie-cutter malls that are too retail-centric.
Developers also have to consider developing in areas where there is a strong mobile signal penetration, as millennials will surely be glued to their phones Instagramming every moment they can.
- IT-BPO will continue to drive demand for office spaces
The start of the year for information technology–business process outsourcing (IT-BPO) firms was not that strong as it could have been. According to Colliers International Research, outsourcing-led services commenced the year with a 6.8 percent growth, from the high of 7.5 percent in the past year.
However, there are reasons to remain optimistic in the sector. More than the expansion of traditional service-oriented firms in consulting and accounting segments, major BPO players have sealed several deals to new accounts which can spell an increase in the take-up of office spaces especially in the later part of the year.
BPO activities in provincial areas like Cebu, Pampanga, Bacolod, and Davao are expected to continue their current boom given their competitive manpower, viable business setting, and local government support.
Another thing to look out for is the burgeoning business centers outside that of Makati, Ortigas, and Bonifacio Global City. As business parks saturate these city-centers, all eyes will be on nearby cities and provinces that have great transportation infrastructure and have a potential to be the next rising economic powerhouses.
Metro Manila’s dominance in economic activity may soon ease with the emergence of other growth areas outside the Philippine capital. According to the National Economic and Development Authority (NEDA), these emerging cities are keeping up with Metro Manila not just in terms of economic activity but also for their innovation and way of attracting people.
Angeles City in Pampanga is one of the said cities, boosted by its Clark Green City development. Zamboanga City is also catching up, wielding a strong IT environment. Economic dynamism is also seen in cities like Bacolod in Negros Occidental, Naga in Camarines Sur, Baguio City, the province of Batangas, Laoag in Ilocos Norte, and Puerto Princesa in Palawan.
- Offshore gaming will attract more tourists and spur demand for offices
With the launch of the PAGCOR’s Philippine Offshore Gaming Operation (POGO) last year, the office market is bound to get some demand as operators expand. Colliers noted that around late last year, PAGCOR released 25 POGO licenses. Offshore gaming firms are expanding, leading to the surge in demand for BPO spaces.
This will also result in stronger hotel occupancies this year. The opening of Okada Manila will surely drive foreign gamers in the Philippines as it tries to further expansion this year. Foreign arrival in the Philippines is expected to reach 7 million and hospitality players will be able to benefit from this. More so, other foreign names such as Grand Hyatt and Dusit Thani will continue their foray in the country in the coming years.
- Condotels are becoming a thing
In the first quarter of the year, there were a number of investors who snapped up residential properties with the intention of making a business out of leasing the units for short term-staying guests. These are called condotels. As the year goes on, there will likely be a spike in the take up for condominium units that will be listed under Airbnb-type of listings.
This is similar to the trend that Santos Knight Frank dubbed as condomitels. A fusion of condominium, dormitory, and hotel, this concept is becoming popular in areas near universities and business districts. These residential units are targeted mostly for students and young professionals.
What should be done to attract foreign investments?
Lamudi sees it necessary for the country to be more open to foreign capital entering the local market. While it would be very unlikely for land ownership policy to be completely overhauled, there are measures that could be put into place to relax these rules allow foreign investment to come pouring.
The country should also maintain its strong cash remittances to be able to retain investor confidence. It is important that the Philippines maintain its status as a viable choice for property investment, especially in retail and office sectors.
It also has to keep its infrastructure game strong. The government of the Philippines is eyeing to upgrade the country’s infrastructure by revamping Metro Manila’s rail and bus network. There are also efforts to improve the country’s aircraft systems.
With these in mind, the rest of 2017 will pave way for an increased foreign direct investment in the country’s real estate sector.