Office completions seen to drop by 30%

MANILA, Philippines — Office completions in Metro Manila are projected to decline by 25 to 30 percent this year from the initial estimate of 1.07 million square meters owing to the coronavirus disease 2019 pandemic, real estate services firm Colliers International said.

In its Asia Pacific Market Snapshot report for the second quarter, Colliers said no new office buildings were completed during the quarantine period given manpower limitations.

Colliers also expects office vacancy to rise between 5.5 and seven percent this year from 4.3 percent last year, citing delays in office leasing decisions given uncertainties in the market.

To improve occupancy rate, Colliers said landlords have decided to become flexible in accommodating new transactions.

As for demand from business process outsourcing firms including call centers and shared service firms for office space, their expansion depends on the approval of additional economic zones to enjoy fiscal and non-fiscal incentives.

Last year, the Office of the President imposed a ban on the processing and approval of applications for new economic zones in Metro Manila to spur development in the countryside.

With the COVID-19 crisis, Colliers said some firms have been compelled to consider expanding in areas outside Metro Manila such as Cebu, Iloilo, Davao and Clark in Pampanga.

When it comes to residential property, demand in Metro Manila is seen to soften this year due to the impact of the pandemic.

Residential demand for the whole country is expected to improve next year as both the global and local economy pick up.

Colliers said demand for condominium units is partly driven by remittances from overseas Filipino workers.

Given challenges posed by the pandemic to the property market, rents for completed condominium units are expected to decline by 5.5 percent this year. This is lower than the 15 percent contraction during the Asian financial crisis in the late 1990s, but steeper than the 3.7 percent drop during the global financial crisis in 2009.