MANILA, Philippines — Colliers Philippines is increasingly bullish that the Philippine economy’s surprise expansion in 2022 will boost the appetite for office space and residential properties.
The professional services and investment management firm made a case for their renewed optimism in a commentary on Thursday. The Philippine economy grew 7.6% year-on-year in 2022, as consumer spending stood unfazed against brutally high inflation exacerbated by supply chain woes.
“An aggressive stance taken by the national government in attracting manufacturing investments should result in greater absorption of industrial space across the country,” said Joey Roi Bondoc, Colliers Philipines research head.
The real estate sector faced headwinds in 2020 and 2021, as some businesses and firms left their traditional office spaces as remote work was finally recognized by employers.
Despite this, real estate research firms reported optimism was plentiful amid the pandemic as residential property prices kept appreciating.
Data from Colliers Philippines showed that office space transactions in Metro Manila ballooned 43% year-on-year to 603,800 square meters in 2022. Despite this net take-up of office space of 110,500 sqm still fell below their previous forecast of 140,000 sqm.
Office space transactions within regions rose by as much as 50% on account of outsourcing firms expanding operations. Broken down, office spaces were scooped up in Cebu, Davao, and Pampanga, as the data showed those provinces account for 90% of transactions in 2022.
“To cash in on the sustained growth, developers should line up more projects in key growth areas outside of Metro Manila,” Bondoc added.
Colliers Philippines noted that developers of industrial parks and facilities should ready themselves as manufacturing investments pledged under investment promotions agencies are set to occupy more real estate.
The investment management firm is likewise projecting that from 2023 to 2026 there will be new office spaces within the country, estimated at 555,000 square meters.
This office space supply was equivalent to the amount recorded from 2013 to 2016, which preceded the entry of Philippine offshore gaming operators into the economy.
On the residential property front, Colliers Philippines reported 9,000 condominium units in Metro Manila finished construction in 2022, inching up 3% year-on-year. Despite this new condominium launches have yet to regain the same vigor they saw in 2019.
Colliers Philippines is projecting annual average delivery of 6,700 units from 2023 to 2025.
“The personal consumption-led economic growth should also spur retail and hotel demand,” the commentary added.