Condos are seen as the main beneficiaries as businesses resume on-site work

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PHILIPPINE STAR/ MICHAEL VARCAS

A RETURN to on-site work for most employees is expected to spur a recovery in the residential real estate market, especially condominiums, according to Colliers Philippines.

“In terms of supply, we are seeing a sustained recovery in condominium completions…. many employees are returning to traditional workspaces and looking for nearby condo units,” said Joey Roi H. Bondoc, Senior Director of Research at Colliers, during a virtual briefing.

On the other hand, the pre-sale condominium market in Metro Manila is likely to be hampered by rising interest rates, according to Colliers.

“In our view, yield compression has also forced developers to delay condominium launches in the Capital Region. Colliers thinks developers are now taking a more cautious stance as they await the release of the new administration’s economic program, including housing reforms, and are assessing general consumer sentiment amid rising inflation and interest rates. interest,” the company said in its report.

“The secondary market, meanwhile, should benefit from the return of foreign employees as well as back-to-work mandates from local companies. We see this positively influencing prices and rents in key business districts,” he added.

Bondoc said the administration’s plans for infrastructure development will also support the recovery of the residential real estate sector.

“There’s a push to support ecozones, investments and data centers, which is a potential driver for spaces,” he said.

Colliers expected to deliver 10,100 units by the end of 2022, with the Bay Area accounting for about 60% of this new supply.

“As for the second half of the year, we expect the delivery of approximately 8,800 new units. This is an aggressive (completion rate) that we expect,” Mr. Bondoc said.

“This relentless completion will propel the Bay Area to the top of the business districts in terms of completion or total share of condo supply. By 2024, the Bay will overtake Fort Bonifacio,” he added.

Rents rose 0.4% in the second quarter of this year, Colliers said. “The return of more local and foreign employees to their offices should support rental demand and increase rents by 1.2% year on year in 2022.”

In the second quarter, vacancies fell in all submarkets except the Bay Area.

By the end of the year, Colliers said he expects job vacancies to fall to 17.3% from the record high of 17.9% set in 2021.

“Given the weak residential demand over the past two years, developers have offered attractive promotions and discounts to attract potential buyers and investors. Common offers included lower booking fees, split or zero deposits, and free furniture, gadgets and appliances such as air conditioning units,” the property consultant said.

“In our opinion, developers should continue to be aggressive in offering innovative and attractive promotions to resume residential demand. Some developers may choose to offer early move-in promotions or rent-to-own programs for their ready-to-occupy (RFO) units. For non-RFO units, developers can offer extended payment terms even beyond revenue. These promotions should be highlighted especially for customers wary of rising inflation and rising mortgage rates,” he added.

The office market is expected to grow as economic activity picks up, with the government indicating there will likely be no further lockdowns.

“Overall, the Philippines is open for business. We appreciate the increase in foreign portfolio investment (FPI) and the strengthening of the dollar. The President has also stated that no further containment will be put in place and we believe this is an important development,” said Colliers Associate Director Kevin Jara.

In his State of the Nation address on Monday, President Ferdinand R. Marcos, Jr. said he would observe a policy of non-lockdowns for the remainder of the pandemic.

“Colliers Philippines has recorded two consecutive quarters of positive net office take-up. This indicates that Metro Manila deals are holding up despite the popularity of hybrid working arrangements, and we expect sustained uptake for the remainder of the year. New supply, meanwhile, is returning to pre-POGO levels last seen in 2016,” the company said, referring to the boom and bust cycle seen in the office market due to gaming operators. Philippine offshore.

In 2022, Colliers expected approximately 808,900 square meters of new supply.

“From 2023 to 2026, we anticipate the completion of new office space to return to pre-POGO levels,” he added.

“We see a gradual market recovery and recommend that landlords and tenants capitalize on the growth trajectory by evaluating hybrid working arrangements that will support operations; take advantage of the opportunities created by the tenant market; clarify concerns regarding the transition to Investment Promotion Agencies (IPAs) and the qualification of incentives; and providing flexibility on office transfer terms based on tenant preferences,” he added. — Luisa Maria Jacinta C. Jocson

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