Property consultant Colliers said developers should focus on post-pandemic recovery strategies as the economy bounces back despite inflationary pressures.
“Colliers believes that sustained recovery is likely to benefit major economic sectors including property development. For the first three quarters of the year, Colliers has seen a rebound in office transaction; improvement in pre-pandemic condominium take-up and launches; rising mall consumer traffic; and a gradual recovery in local and foreign tourism,” the property consultancy said.
Colliers said among the thrusts for the real estate sector is “further differentiation of projects as tenants, investors and end-users live and operate under a newer and better normal.”
It said the sustained leasing activity in Metro Manila has resulted in stable office vacancy at 17.7 percent, though year-end vacancy will still reach 19.5 percent compared to 15.7 percent in 2021, due to the significant amount of new supply coming in at 102,700 square meters (sq.m.), while pre-commitment levels remain muted.
Net take-up by yearend of 2022 will reach 140,000 sq.m.
“From 2020 to Q3 2022, rents have corrected by 35 percent. In 2022, we see rents dropping further by 10 percent before bottoming out in 2023,” it said.
Colliers, meanwhile, sees a recovery in both the demand and supply for Metro Manila’s pre-selling condominium market.
In the third quarter, takeup reached 6,100 units, bringing the nine-month takeup to 14,900 units, already outpacing full-year 2021 figures. Pre-selling launches reached 13,200 units, the highest recorded quarterly launch since the fourth quarter of 2019.
“We believe that the recovery should be sustained by demand from local and foreign employees,” Colliers said but cautioned that developers should strictly monitor interest rates and their potential impact on mortgage rates.
“The central bank has raised interest rates by 300 basis points to 5 percent as of November from 2percent at the beginning of the year. We also see compressing yields and rising prices of construction materials likely hampering launches across the capital region,” Colliers said.
The potential exodus of Philippine offshore gaming operators will affect vacancy in the secondary residential market, particularly in the Bay Area, it added.
In the retail space, Colliers expects new supply to reach 356,000 sq.m. From 2022 to 2025, it sees the annual delivery of 247,800 sq.m. of space, with 80 percent of the new supply likely coming from the Bay Area and Quezon City.
“Mall operators have now been reporting consumer traffic of 85 to 95 percent of pre-COVID levels from only about 40 percent in the third quarter of 2021. More retailers have also been active in taking up physical space as they anticipate the surge in consumer traffic this holiday season,” Colliers said.
“Based on our mall scans, about 50 percent of the new and upcoming retailers will come from the food and beverage segment followed by fashion accessories, beauty and health at 27 percent,” it added.
Colliers said vacancy in the segment will average at 16 percent this year and then rise to 17 percent next year, before receding to 14 percent in 2024.
“In 2022, we expect rents to grow by 1 percent after correcting by a combined 15 percent from 2020 to 2021,” Colliers added.
