Recovery in sight for PH real estate sector — Leechiu

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Metro Manila (CNN Philippines, February 2) — The pandemic-stricken property sector is exhibiting ‘early signs’ of a rebound, a consulting firm said.

In a statement, Leechiu Property Consultants chief executive officer David Leechiu said while this year would not be “all smooth sailing” for the industry, it will “recover faster than expected due to a confluence of factors,” like the sustained expansion of the business process outsourcing industry in the Philippines.

BPOs are projected to flourish further in business districts within and outside of Metro Manila, noted associate director Mikko Barranda.

With many markets in the United States and Europe currently going through their third and fourth waves of COVID-19 transmission, western firms are “likely” to have outsourced some tasks to countries like India and the Philippines by the second quarter of 2021 in a bid to cut costs.

“This is how they behaved in 2008 and likely to behave in the next few months,” said Barranda. The world plunged into one of its worst financial crises during the said year.

Leechiu said an indication that the worst is over for the sector was a recent property sale in Bonifacio Global City “at a record value” for the country, along with a “continued” rise in overall capital values in main business districts, and in prime residential and industrial areas.

The lot sale was 12% higher than the last transaction recorded in 2019, he added.

“The 2020 pre-sales of residential developers and a 2021 pipeline demand of 300,000 sqm for office space further confirmed that things are looking up once again across the industry segments,” the statement read.

The firm also cited the recent order of the Supreme Court barring the imposition of new taxes on Philippine Online Gaming Operators (POGO), saying it had slowed down their exit. The gaming firms are likely to resume operations once they reach a solution with government agencies, it added. 

Land prices are likewise projected to exhibit growth in post-pandemic years similar to what was observed after the 2008 financial crisis. Land prices fell in 2009, but grew by 20% in 2010, 30% in 2011 and 50% in 2012 in core markets like the BGC, noted LPC associate director Tam Angel.

Leechiu likewise expressed optimism that vaccine-driven consumer confidence will also be felt in the residential segment. He cited the surge in residential activity in key U.S. markets, with consumers anticipating doses following the start of the country’s vaccine rollout. The same would occur in the Philippines once vaccine doses start being administered to the general public, he predicted.

Millions of doses of Pfizer and AstraZeneca’s COVID-19 vaccines are set to arrive in the Philippines in the first quarter of 2021, with initial vaccine shipments expected to enter the country in February. The Philippine government hopes to purchase 148 million vaccine doses this year, hoping to inoculate at least 50 million Filipinos.

The firm added that state borrowings of 10-year and 25-year money are at record low rates, leading to a mortgage market decreasing interest fees over 10 years from the 9-11% range at present.

“This would be a game-changer for the Philippine residential sector as it would make housing more affordable for the lower- and middle-income sectors and likewise create a housing boom for many years to come,” LPC explained.

The LPC also expects the upcoming rollout of 146.7 kilometers in national infrastructure to give business productivity a boost, along with tourism and the economy in general. For instance, the opening of Skyway Stage 3 would strengthen business confidence and increase land values in places now accessible to the metro’s key districts. 

The firm also cited the opening of Clark International Airport's new terminal in July, which will eventually allow global travelers to bypass the capital region and directly visit tourist spots like La Union, Pagudpud and other areas in Luzon. This will improve activity and land values in these places, it added.

Airport projects currently in the pipeline, such as the New Manila International Airport, will allow the same opportunities for other destinations after the pandemic, LPC said.