PROPERTY consultant Colliers International said property valuation in the Philippines is seen to decline between 10 to 15 percent as a result of dampened interest as the economy grapples with the impact of the coronavirus pandemic.
Colliers expects the office segment to experience higher vacancy due to a slowdown in leasing activities. The supply for the year is seen to drop by 26 percent, with the annual average new supply between 2020-2022 to hit just 896,200 square meters (sq.m.) compared to the previous 1 million sq.m. average.
Vacancy is seen to average 5.1 percent for the period, with the COVID-19 enhanced community quarantine’s impact to be felt by the second quarter of the year.
Colliers said work stoppage due to the lockdown is likely to push back completions by around one to two quarters, with new supply likely to start rebounding by 2021, partly including the deferred completions in 2020.
This will shift the offer segment to that of a tenant’s market, with “greater leeway for rent negotiation and concessions.”
Joey Bondoc, Colliers senior research manager, said some firms are expected to pause long-term occupancy decisions, which may take six to 12 months after the pandemic before they start to occupy new space.
“But there are opportunities for companies who are doing well,” said Bondoc.
The residential segment meanwhile sees a softening of demand, particularly in business districts dependent on Philippine offshore gaming operators.
Colliers said prices and lease rates this year could drop by 15 percent and 5.5 percent, respectively.
Developers may also pause new launches for this year, compared with 40,000 units launched in 2019, according to Bondoc.
“To take advantage of the recovery, Colliers encourages developers to highlight high-quality property management with a focus on sanitation and emergency preparedness, implement creative lease terms for ready-for-occupancy (RFO) units, and offer flexible payment terms to attract buyers, especially as pent-up demand starts to be released in 2021,” the property consultant said.
“Meanwhile, we encourage buyers to take advantage of more attractive pricing in the market, especially for mid-income condominium units,” it added.
Colliers said the economic impact of the coronavirus pandemic may be worse than that of the 2007/2008 global financial crisis, but is not as bad as the 1997/1998 Asian financial crisis.
