Time to pick up real estate bargains, buyers urged

Elijah Felice Rosales (The Philippine Star) - June 13, 2021 - 12:00am

MANILA, Philippines — Real estate buyers should take advantage of the recession by signing long term contracts at discounted rates, according to a property consultancy firm.

In a report, Canada-based Colliers told tenants in the Philippines to purchase real estate assets now, as developers slash property prices to fill up vacancies at a time when the economy suffers from a recession.

The economy in the first quarter contracted by 4.2 percent due to a resurgence in COVID-19 infections and a revert to lockdown in Metro Manila and the provinces of Bulacan, Cavite, Laguna and Rizal.

With the slump, Colliers said tenants, especially of office spaces, should exploit the market that is now favorable to their terms. The firm said now is the best time to negotiate a long term lease, as rates keep on sinking alongside the demand for big ticket items, such as property.

Colliers expects rent for office spaces to drop by 15 percent to P797 per square meter by the end of 2021. Prices are only seen picking up by 2022 onward.

On the other hand, vacant office spaces are projected to reach 12.5 percent by the end of 2021, as tenants may opt out of their contracts with the shift to remote work arrangements.

Likewise, Colliers expects rent for residential properties may shrink by 3.8 percent to P684 per sqm, and recovery may only start next year depending on how the economy regains its pace.

As more than 10,000 units will be completed within the year, vacancies are expected to increase to a record 17.2 percent from 15.6 percent in 2020.

The Canada-based consultancy firm said residential developers can capture the growing market of returning overseas Filipino workers (OFWs). OFWs who flew home after losing their jobs abroad could deploy their savings in long term investments like property.

Colliers argued the property sector, and the economy in general, would bounce back depending on how fast the government can vaccinate its population. Based on the immunization rate now, the firm said real estate may only recover by 2022 the soonest.

“Colliers believes the economy’s recovery is likely to depend on the success of the vaccine rollout,” the report said.

“In our view, economic recovery should have a positive impact on the country’s property sector in 2022,” it said.

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