The recovery of the economy from the impact of the new coronavirus disease 2019 (COVID-19) pandemic will not be as fast as the ones in previous crises, dragging with it the property market, according to Lobien Realty Group (LRG).
Sheila Lobien, LRG chief executive officer, was comparing the pandemic to two 1998 Asian financial crisis and the 2008 global financial which saw a “V” shaped recovery but that “LRG forecasts that 2021 will be a slow but sure recovery year for real estate as well, particularly for the office and residential property markets,” the property consultancy said in a statement.
In a press conference, Lobien said vacancy rate could go up to 14 percent in the office market in the next two quarters from the current 8 percent while rental rates can soften even more from today’s P1,120 per square meter (sq.m.) per month “unless demand from BPOs (business process outsourcing) comes back.”
Lobien said office buildings are being vacated due to the exit of Philippine offshore gaming operations (POGOs).
Office supply is estimated to reach 600,000 sq.m. this year which is about the same in 2020 and significantly less than the 1 million sq.m. per year in previous years.
Only half of last year’s office stock was taken up.
LRG said in the fourth quarter of 2020, supply of office space in Metro Manila totalled 739,312 sq.m. while available supply amounted to 313,533.17 sq.m. which means 53 percent of all office spaces in Metro Manila remain leased.
LRG forecasts rental rates to decline 25 to 30 percent this year.
“For now 2020 rental rates computations have not reflected the decrease due to the POGOs’ contractual agreements of about a year’s worth of security and advance deposits which protected the landlords’ rent income during the lockdowns and despite the numerous lease pre-terminations,” LRG said. – Irma Isip