Discounts and concessions for property buyers and renters will help cushion the impact of the slowdown in takeup and purchases of properties across all segments, according to property consultancy Colliers,
Colliers in a report said due to slackened demand, office rental rates will drop initially, with capital values following suit.
Colliers said landlords could consider giving rental concessions to tenants like additional rent free. For incoming lessees, Colliers said lessors could cut the standard three months deposit, three months advance rent to two months instead.
Colliers said landlords could also consider postponing rent increases to help tenants cope with overall business slowdown.
But Colliers said such slowdown in the office market may be offset by possible new health and safety standards in office densities which may spur more space demand as well as the probable increase in outsourcing requirements from businesses in developed markets to cut costs.
In the residential sector, Colliers said developers can give discounts and extended payment terms to buyers.
In the medium term, they can control new supply to control pricing, Colliers said.
It added new projects should consider the luxury of open space, health and wellness and amenities in their designs.
Colliers also suggests more focus in the suburbs of Metro Manila, where land is relatively cheaper, and where these new design philosophies can be implemented.
Condominiums in the metropolis may experience a steeper drop in values compared to houses in the suburbs.
Affordable and mid-income segments would likely take the brunt of the price correction as these are the markets that caters to overseas Filipino workers and the middle-class workers, Colliers said.
But with the big residential supply backlog, Colliers sees demand picking up when consumer confidence returns to normal.
In retail, Colliers said mall owners may consider immediately adjusting rental fees, postpone scheduled rent increases or shift to percentage of sales rental during this period to help locators cope and survive.
Colliers said mall operators should also reevaluate the tenant mix of vacant spaces and consider leaning more towards essential stores and services.
Developers could also redesign malls from monolithic blocks to a strip mall hybrid with more open spaces, open-air seating, and shops with their own external access.
Colliers sees retail occupancy to take a hit as some weaker stores and restaurants may close shop.
It added those which will survive will have to tend to consumers’ changing their shopping behavior.
“Base rents are expected to fall and expected overage rents zeroes out with retail capital values sharply decreasing,” Colliers added.
