Online still the norm

Online activities in lieu of physical ones are likely to continue being the norm.

In a research conducted by Qualtrics in the Philippines to determine the extent to which COVID-19 has encouraged consumers to embrace digital channels, it was shown that since the beginning of the pandemic, about 67 percent of the respondents said they have purchased more online, while 62 percent have increased the frequency of  their use of online banking.

Shopping for groceries online also increased according to 53 percent of the survey respondents, while 55 percent said the frequency of their  visits  to retailers have decreased.

Qualtrics observed that the move to online shows no signs of slowing, with 76 percent of  respondents saying it is likely they will continue online shopping over the next six months, or until March next year. As further proof that COVID-19 is changing the behavior and preferences of people in the Philippines, 47 percent said it is more likely they would pick up food from a restaurant rather than dine in, the survey showed.

However, the same research revealed there are hints of things returning to the previous normal in the coming months. The report said that although many respondents, or 94 percent, still say they are very concerned by the pandemic, about 40 percent also said it is likely they would choose to eat at a restaurant in the next six months.

The survey also showed that respondents were also planning to take a family holiday (37 percent), use public transport (36 percent), and visit the mall (34 percent) over this same time frame.

Not surprisingly, travelling by air is the least likely behavior to return to the previous normal, with more than half saying it’s unlikely they’ll travel internationally (57 percent) or domestically (54 percent) by plane within the next six months.

In connection with this, the International Air Transport Association (IATA), which represents some 290 airlines comprising 82 percent of global air traffic, including our own domestic carriers, recently reported that total demand, as measured in revenue passenger kilometers, in September was 72.8 percent lower than the same month last year, while international passenger demand dropped 88.8 percent.

Asia-Pacific airlines’ September tariff dropped 95.8 percent in September compared to year-ago levels, with the region continuing to suffer from the steepest fall in traffic as flight restrictions have remained stringent with few reopening of borders.

Meanwhile, going back to the Qualtrics survey, it was revealed that over the past six  months, the number of people in the Philippines expecting COVID-19 to affect their day to day life for more than a year has increased to 45 percent.

According to Harish Argarwal, head of CX Strategy for Southeast Asia, these new behaviors and preferences that have emerged are likely to remain post-pandemic, adding that there has been a massive shift towards digital.

He also pointed out that it is critical for brands to ensure they are able to optimize the experience they deliver on their digital channels, including mobile applications. Simultaneously, even though consumers are beginning to go back to some previous habits, high levels of ambiguity remain, meaning businesses must be able to understand and quickly respond to changing environments, he said.

Phl property sector still suffering

The pandemic continues to unleash its fury on the residential property market sector.

In its latest report, Colliers Philippines said that in terms of demand, take-up in the secondary market – which covers completed units – remains subdued due to a slowdown in demand from foreign employees, including those from the POGO sector. Pre-sales in the first nine months of 2020 reached only 24,900 units, or down 28 percent year-on-year.

It stressed that for local investors, concerns on sudden unemployment and reduced incomes as more businesses close will likely contribute to a gloomy sentiment in the residential market, adding that the impact of the pandemic on consumer confidence and OFW remittances is likely to spill over to residential demand.

The survey showed that from January to August 2020, overseas Filipinos’ cash remittances to the country declined to $19.3 billion from $19.8 billion (compared to the same period of 2019). Meanwhile, based on the third quarter 2020 Consumer Expectations Survey of the Bangko Sentral ng Pilipinas, consumer confidence decelerated to -54.5 percent, a record low since the poll started in 2007. The percentage of households that plan on buying properties in the next 12 months also plummeted to a record-low 3.3 percent.

It also said that aside from local employees, leasing across the capital region is also adversely impacted by the slower influx of foreign employees.

Colliers Philippines also observed that several expatriates have preterminated leasing contracts as they cannot go back to the Philippines due to global travel bans. Some foreign teachers had to stay in their home countries as international schools have implemented online learning. Meanwhile, several POGO employees have already left the Philippines as their firms have ceased operations due to concerns on the rising number of COVID-19 cases in Metro Manila and regulatory roadblocks, including imposition of higher taxes and non-issuance of permits to operate, it said.

On the supply side, the report revealed that construction delays continue to hound completion in Metro Manila.

In the third quarter, the report showed that more than 620 units were delivered with the completion of The Florence at McKinley Hill Tower 3 in Fort Bonifacio and Eastwood Global Plaza Luxury Residence in Eastwood City. Due to the pandemic, Colliers projects the delivery of only 6,000 units in 2020.

It said that turnover of projects, especially in the Bay Area, was delayed due to labor constraints during the imposition of a stricter lockdown in Metro Manila especially in the second quarter. Colliers noted that the average turn-over grace periods adopted by developers now ranges from six to 12 months from only three to six months pre-pandemic.

Meanwhile, it noted that the rental market continues to face headwinds and it is expected that average rents will drop 7.7 percent this year before a slow recovery starting the second half of 2021. The slow rebound should be anchored by a pick-up in office leasing, it added.

As for vacancy, Colliers projects that Metro Manila vacancy will reach 15.3 percent due to softer sales and leasing in the secondary market, but it is expected that vacancy will start improving in the second half of next year as consumer and business confidence rebound.

As for capital values, Colliers said prices would likely drop in 2020, albeit at a slower pace as completion has slowed. But there will be a slight rise in prices in 2021 due to improved investor interest and consumer confidence.

It emphasized that residential sales and leasing are adversely affected by a lackluster office market and that the condominium segment is also reeling from subdued business and consumer confidence.

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