Amid a stuttering recovery of the economy due to the coronavirus disease 2019 (COVID-19) pandemic, realtors remain pessimistic of the industry’s short-term prospect, according to industry consultant Cushman & Wakefield Philippines.
The second COVID-19 Real Estate Developer Sentiment Survey of the property consultant showed that 62 percent of its respondents “remain unsure of the country’s economic recovery path in the next 12 months.”
“The short-term does not bode well for the real estate market. Real estate developers in the Philippines remain less optimistic in the short-term as they expect the real estate market to remain vulnerable with weak sentiment and trimmed supply and demand, as well as declining property values and rental rates,” it said.
Respondents however are hopeful of the medium-term prospects, with 31 percent expecting the real estate market to show “early signs of recovery” with both supply and demand strengthening, as well as moderate growth in property values and rental rates, it added.
“Nonetheless, real estate developers see the vulnerability of the real estate market to persist in the next 12 months,” Cushman & Wakefield said.
Using online questionnaires sent to real estate players in the country between February and April, Cushman & Wakefield said respondents anticipate the real estate market to “build-up momentum with strong rebound of both supply and demand” two to three years down the road.
“During that timeframe, 31 percent believe that property values and rental rates will revert to pre-pandemic level while the other 31 percent see moderate growth in property values and rental rates,” it said.
On a per sub-market segment, demand prospects for the industrial sub-sector are promising with 83 percent of industrial developers expecting an increase in new lease volume, while 50 percent are expecting an increase in sales transactions in the next 12 months.
“On the other hand, prospects for retail and hotel sub-sectors remain dimmed with 75 percent of hotel and retail developers expecting that the decline in occupancy will persist in the next 12 months,” it said.
“For the office sub-sector, more than half of office developers expect a decline in new lease volume. Similarly, the bulk of residential developers (38 percent) expects that there will be a decline in sales transactions in the next 12 months,” Cushman & Wakefield added.
Meanwhile,75 percent of hotel developers think that they will continue to implement rental adjustments in the next 12 months, while 63 percent of retail developers are more likely to do the same.
“Whereas 31 percent of office developers think that there will still be rental adjustments in the next 12 months, another 31 percent believe that they are less likely to do so,” Cushman & Wakefield said.
Sixty-seven percent of industrial developers believe that rental adjustments are not necessary within the next 12 months.
“Market recovery will be uneven across the real estate sub-sectors, as the respective demand sources have been affected by varying degrees. The COVID-19 pandemic has disrupted the various sources and growth of demand for the different real estate sub-sectors, influenced by a similar uneven economic recovery across the global market,” said Claro Cordero, Cushman & Wakefield director and head of research, consultingand advisory services.
According to Cushman & Wakefield, respondents were targeted based on their “ability to convey information accurately, considering their industry experience and critical positions” like top executives and “specialized experts of notable real estate developers with completed and on-going projects in the Philippines.”
The survey includes questions that explore the economic recovery outlook, effects on real estate supply and demand, health and safety regulations, and market assessment in the short,medium and longterm.
“Specific information presented includes observed market trends during the pandemic,” the property consultant said.