Property consultant Colliers said a further reopening of the economy bodes well for the property sector following a faster-than-expected 7.1-percent expansion in the gross domestic product (GDP) in the third quarter.
“The improvement in economic output was primarily driven by a rise in private investments as well as consumer and government spending. The gradual reopening of the economy bodes well for Philippine property. This could result in greater office and pre-selling condominium takeup over the next 12 months. Malls are starting to welcome more guests and this should also translate to improved retail space absorption and eventual recovery in rents,” Colliers said.
Colliers said in the first nine months of the year, office office transactions in Metro Manila reached 303,000 square meters (sq.m.) up from the 295,800 sq.m. last year. Traditional firms accounted for 61 percent of total transactions.
Outside Metro Manila meanwhile, Cebu captured the largest share of deals, covering 30 percent of total provincial transactions at 26,100 sq.m., followed by Iloilo at 19 percent at 16,300 sq.m.
“In the third quarter, we saw the delivery of 156,600 sq.m. of new office space, double the 77,700 sq.m. in Q3 2020,” Colliers said.
Colliers said the office leasing business’ recovery will be anchored by the ramped up inoculation campaign which should allow more employees to report to the office, in addition to the potential rebound in outsourcing demand following the recovery of major economies such as the United States.
In the residential market, Colliers expects an additional supply of 8,200 units, up 143 percent from the 3,370 units to be completed this year.
“The Bay Area and Fort Bonifacio are likely to account for 97 percent of new supply,” it said.
Vacancy increased to 17.6 percent in the third quarter 2021 as the residential market’s leasing business track the subdued office space absorption. Colliers said it sees vacancy easing to about 17.3 percent in 2022.
In the third quarter, rents and prices dropped by 0.7 percent and 1.0 percent, respectively, from the previous quarter. Colliers said it expects a gradual rebound starting by the second quarter of next year, with the easing of restrictions in Metro Manila “potentially buoying demand in the secondary market.”
“In the nine months of 2021, we recorded a takeup of 7,900 units in the pre-selling market, down 70 percent year on year. Launches during the period also dropped by 4 percent,” it said.
“In third quarter alone, upscale to mid-income projects dominated both launches and takeup. We see a glimmer of optimism with improvement in consumer confidence and business outlook starting the fourth quarter,” it added.
Colliers said the successful roll out of the government’s vaccination program, economic rebound and re-absorption of office space will bolster demand for both the pre-selling and secondary residential markets with the competitive mortgage rates and stable overseas Filipino remittances likely supporting residential sales growth.
Colliers said the easing of lockdowns in Metro Manila has allowed the reopening of leisure and entertainment facilities such as arcades and cinemas.
Colliers believes t the projected drop in retail rents of about 5 percent in 2021 from a 10 percent decline in 2020 should allow retailers to lock in space and negotiate for competitive lease rates in prime locations.
Retail space vacancy in the third quarter was at 14.8 percent.
