Several unexpected events have rattled the nerves of some, but there are still reasons to be optimistic about the Philippine property market. While 2020 may be a challenging one, Santos Knight Frank has identified seven Philippine real estate trends to watch for this year.
1) REITs take centerstage
Real Estate Investment Trusts (REITs) finally got the green light in the Philippines earlier this year. Since then, Ayala Land filed an application to create a REIT subsidiary while DoubleDragon Properties Corp is looking at raising a substantial amount of capital via REITs. Santos Knight Frank believes that REITs will unlock a number of opportunities for the property market as more developers get involved.
2) BPO to remain strong
The BPO sector has been a key driver for the office market, especially in Metro Manila. Joint research from IBPAP and Everest found demand for office space from BPO companies will grow 3-7 percent annually.
“In 2020, we expect BPO demand to be strong, despite the limited amount of Philippine Economic Zone Authority-accredited office space. BPO demand is strongest in BGC and Pasay, where rents should be going up. Conversely, Ortigas and Quezon City may have more supply than demand, and rents will stay flat in those areas as the vacancy rates increase,” Morgan McGilvray, Senior Director, Occupier Services & Commercial Agency, Santos Knight Frank, said.
3) Co-working moves into Cebu
Co-working is hardly new with several major operators active in Metro Manila. The sector is now growing in Metro Cebu. Santos Knight Frank estimates that 3 percent of the office market is occupied by co-working spaces spread across Cebu IT Park, Cebu Business Park and other buildings around the region.
4) BCG goes green
More than 300 buildings in the Philippines have begun implementing LEED guidelines with half of this total already certified by LEED. Nowhere is the shift to green more evident than Bonifacio Global City. Santos Knight Frank reported that 100 percent of new office buildings in BGC are LEED-certified.
5) Metro Manila suburbs to be logistics growth hub
The next wave of industrial and logistics real estate sector growth will most likely take place in the provincial areas to the north and south of Metro Manila.
“The areas of Calabarzon and the corridor NLEX-SCTEX-TPLEX in North Luzon are prime spots for logistics and industrial real estate to grow. These would be the next hubs for distribution centers and warehouses,” Kash Salvador, Associate Director for Investment & Capital Markets, Santos Knight Frank, explained.
6) Demand for luxury homes still hot
Metro Manila’s prime residential market remains hot as a limited supply of luxury residences can’t keep up with demand from the increasing number of Filipino ultra-high net worth individuals and foreign buyers.
Knight Frank’s Prime International Residential Index ranked the Manila prime residential market as one of the fastest risers in the world, ranking eighth globally and third in Asia.
7) Developers embrace co-living
Co-living has become a popular solution among young professionals who want to live near their workplace but can’t afford to buy or rent larger condo units. Several developers are tapping into the co-living segment with SMDC having launched MyTown and Ayala Land bringing The Flats to the market. More developers are expected to follow suit.