COVID-19’s impact on real estate and strategies to protect your assets

As the effects of COVID-19 on public health and economies are felt globally, activities in the Philippines’ real estate industry are expected to slow down overall in the short to medium term, says leading real estate service provider Santos Knight Frank.

The economic inactivity during the Enhanced Community Quarantine in Luzon and behavioral effects of the pandemic on people’s daily activities will have important implications on property, although impacts will vary per sector.

The Industrial and Logistics sector is seen as being the most resilient, both during and after the Enhanced Quarantine, supporting the production and delivery of goods to groceries and other operational retail stores.

Healthcare real estate, specifically hospitals, out-patient clinics, rehabilitation centers, diagnostic centers, and companies with healthcare accounts, will also attract new investment interests as the public becomes more conscious about health and well-being as a result of the pandemic.

Meanwhile, Santos Knight Frank anticipates to see 810,000 sqm. of new office buildings in Metro Manila launched this year, down from the initial 1.18 million sqm. projected in 2020.

Vacancy level this year is also expected to reach 10 percent (from 5 percent in 2019) in Metro Manila as tenants re-assess their expansion plans, according to Santos Knight Frank’s analysis.

Global companies will be looking into outsourcing more to cut down on costs, potentially benefitting the Philippines’ BPO industry.

Expansion of Philippine Offshore and Gaming Operators (POGOs) face uncertainty until flights between China and the Philippines are normalized.

Other sectors face uncertainty, such as hospitality and tourism. Recovery of this industry will be seen once people deem traveling to be safe again.

Rick Santos, chairman and CEO of Santos Knight Frank, says, “We’re experiencing a Black Swan event on a global scale that has slowed down the world economy, and with it the property market. Liquidity, flexibility, and business continuity are of utmost importance for companies to continue running.”

Santos adds: “In the Philippines, we expect to see resilience in the Industrial and Logistics sectors and opportunities in healthcare. Demand for BPO services will be ramped up by global companies which are cutting costs through outsourcing and offshoring. Retail will return once consumers are confident about their safety and wellbeing.”

With the COVID-19 situation, NEDA expects the Philippines’ real GDP growth this year to be anywhere between -0.6 and 4 percent.


To manage the effects of COVID-19, Santos Knight Frank encourages property owners, landlords, developers, and tenants to adopt creative strategies, such as:

  1. Prioritize cash and liquidity. Real estate is one of the most capital heavy expenditures that businesses incur. Businesses can manage their liquidity by selling non-core assets, seeking overseas funding, and acquiring loans.
  2. Provide a sense of security to tenants and customers. Good property and facility management services in residential and commercial buildings have become extremely important as front-line defense against COVID-19. Protecting lives is tantamount to protecting assets. In the long run, landlords and developers should consider sustainable and wellness-oriented developments as tenants become more conscious about the impact of real estate into the wellbeing of their employees.
  3. Utilize the space of existing real estate assets. Companies can convert empty or non-revenue earning real estate assets into spaces that can be used by sectors with immediate demand such as healthcare, food, and logistics. Businesses can convert their facilities into pop-up healthcare centers, employee housing, offices, warehouses for last-mile logistics, and grocery stores.
  4. Explore payment structures. Landlords and occupiers/tenants in both commercial and residential real estate should find common solutions with regards to payment structures.
  5. Invest on online platforms. Social distancing affects how people buy. With the growth of e-commerce, traditional retailers should explore ways of how online platforms can complement physical stores to boost sales. At the same time, real estate developers and owners can explore virtual tours to continue sales activities in lieu of site inspections.