JLL Philippines expects the Metro Manila real estate market to see continued gradual market recovery, with opportunities to be offered by logistics, electronics commerce and business process outsourcing (BPO).
Janlo de los Reyes, head of Research and Strategic Consulting at JLL cited highlights from the State of the Nation Address of President Ferdinand Marcos Jr. which may affect the real estate market: increased incentives outside Metro Manila, increased focus on infrastructure — specifically on transport and railway, and digital business expansion, which is seen to affect data centers.
Delos Reyes said the strong position of the government that lockdowns will no longer be issued will encourage organizations to operate at business-as-usual (pre-pandemic) levels.
Charlie McNaught, director for Logistics and Industrial, said it is timely to invest in the logistics and industrial sector as the global allocation increased.
McNaught cited the benefits of investing in the sector: optimizing underutilized land assets, stable long-term income returns, strong occupation backdrop leading to rental growth, diversification, and resilience in a non-certain market.
“The overwhelmingly strong demand from e-commerce, third party logistics and fast-moving consumer goods is being met with a critical lack of modern logistics supply, suitable for the occupational needs of these occupiers,” McNaught said.
He also cited growing subsectors such as cold storage and urban logistics.
“Further to this, we are seeing demand from sub-sectors such as cold storage and urban logistics to supplement the backlog of requirements due to increased demand from grocery and next day delivery,” he added.
JLL foresees the structural change in the market to continue.
“We think it’s a new trajectory in the logistics sector, especially in Southeast Asia.”
According to JLL, the second quarter of 2022 saw real estate momentum carried by sustained positive market sentiment,
“In Metro Manila, office leasing volumes continue to climb, with a 21.2 percent increase compared to the previous quarter. Demand in the second quarter of 2022 is diversified, meaning there are different sectors leasing spaces, compared to the information technology-business process management (IT-BPM)-driven first quarter. Non-IT-BPM services account for 45 percent of demand, while IT-BPM and Philippine offshore gaming operations players represent 42.7 percent and 12 percent, respectively.
Office move-outs and rightsizing are still ongoing. Office vacancies continue to stabilize, playing at just around 17.5 percent for the past four quarters, despite the market seeing 54,090 square meters in new supply in the second quarter. The gap between headline and transacted rates continues to narrow, closing in at 9 percent in the second quarter of 2022. – Irma Isip
