The Philippine economy grew at its fastest pace in more than 40 years in 2022.
This is a positive signal for the property market which, over the past decades, mirrored the boom-bust cycle of the country’s economic output.
This economic expansion should support positive net take-up of office space in 2023 and continued rebound in Metro Manila’s pre-selling and secondary residential markets.
Government efforts in attracting manufacturing investments should result in greater absorption of industrial space across the country. The personal consumption-led economic growth should also spur retail and hotel demand.
More projects
To cash in on the sustained growth, developers should line up more projects in key growth areas outside of Metro Manila.
Developers of industrial parks and facilities should also prepare for greater take-up.
Philippine GDP grows 7.6 percent in 2022, fastest in 46 years
In 2022, the country’s economy grew by 7.6 percent, exceeding the government’s target of between 6.5 percent and 7.5 percent for the year and the fastest since 1976.
The 2022 GDP print also surpassed economic analysts’ forecast of a 7.5 percent growth.
The Philippines was also one of the fastest growing economies in Asia in 2022, only behind Vietnam’s eight percent growth.
In 2023, economic output is likely to grow at a slower pace of between six percent and seven percent as elevated inflation and a possible global economic recession are likely to temper the country’s economic expansion.
Office demand turns around
In 2022, office transactions in Metro Manila reached 603,800 square meters, up 43 percent from the 422,400 sqm recorded in 2021.
Provincial transactions nearly doubled to 222,800 sqm from 113,100 sqm, with outsourcing firms accounting for nearly 70 percent of total provincial deals. Cebu, Davao and Pampanga covered nearly 90 percent of total provincial transactions in 2022.
New office space
Colliers recorded the completion of 750,300 sqm of new office space in 2022.
From 2023 to 2026, we expect the annual delivery of about 555,000 sqm, the same level of new supply that Colliers recorded from 2013 to 2016 (450,000 to 550,000 sqm), prior to the entry of POGOs.
Vacancy
Meanwhile, vacancy as of end-2022 reached 18.8 percent, higher than the 15.7 percent recorded in 2021.
In 2023, we see vacancy rising further to 20.2 percent on the back of completion of 641,100 sqm of new supply.
Net take-up in 2022 reached 110,500 sqm, lower than our initial forecast of 140,000 sqm but still a reversal from the negative net absorption that we recorded from 2020 to 2021.
Residential take-up picks up
Colliers recorded the completion of 9,000 condominium units in 2022, a mere three percent rise year-on-year.
This brings Metro Manila’s condominium stock to 151,200 units as of end-2022. From 2023 to 2025, we project the annual average delivery of 6,700 units. By 2024, we expect Bay Area’s condominium stock to overtake Fort Bonifacio’s aggregate supply.
In 2022, the share of the luxury and ultra-luxury market — P8 million and above per unit — to total condominium take-up reached 34 percent, from only five in 2021.
Colliers believes this will continue as the affluent market banks on luxury and ultra luxury residential properties’ capital appreciation potential.
Roaring back
In all, we are optimistic that a strong economic rebound will redound to Philippine property. Developers and investors need to be more agile as they reap gains in the market.
The industry indeed is bound for a rebound, is turning a corner, and seeing light at the end of the proverbial tunnel. All these point to the Philippine property market finally roaring back after two consecutive years of slump.