2024 Property Outlook: Philippine property rebound in the offing – Colliers Philippines


Reactivation of activity centers and further curation of events to entice more mallgoers

In our view, mall operators should maximize the consumers’ willingness to visit brick-and-mortar mall spaces and participate in various activities held in malls’ activity centers. Events such as wedding fairs, concerts, bazaars, and even housing summits can entice more consumers to visit malls, stay longer, and even spend more. Mall operators and retailers should closely coordinate in curating events that are usually held in malls’ activity centers.

Greater interest from foreign retailers

Colliers sees improving demand for physical space from foreign retailers. We attribute this to improving consumer demand on the back of sustained macroeconomic expansion, as well as enactment of measures that further relax the country’s retail regulatory environment. Mall operators should seize demand from foreign retailers planning to enter the country by taking into account their size and fit-out requirements.

Mall vacancy to rise in 2024

In Q3 2023, vacancy across Metro Manila malls rose to 14.4 percent from 14 percent in Q1 2023 due to additional supply. Meanwhile, major developers have reported that revenues from malls grew between 30 percent and 40 percent YOY as of 9M 2023 due to higher occupancy and rental charges. In 2024, Colliers expects vacancy to rise to about 17 percent as we project the delivery of about 385,900 sqm (4.2 million sqft) of new retail space.

Among the retailers that took up space from Q2 to Q3 2023 include: Nike Live in Alabang Town Center, Flying Tiger Copenhagen in Glorietta 4, Decathlon Connect in Robinsons Manila, Skoop in Uptown Mall, Clarks in Shangri-La Plaza, Yogorino PH in SM Sta. Mesa, and MUJI in SM North Edsa.

Renovate or dissipate

Developers should use their renovation or expansion projects as an opportunity to expand F&B tenants and upgrade other retail features such as cinemas and activity centers. Colliers recommends that developers use pockets of vacancies in their malls to house more lifestyle-oriented retailers to attract more consumers and balance the rising popularity of online shopping in the country. In our view, redesigning of physical mall spaces should be complemented by the improvement of retailers’ online shopping platforms. We see a continued reconfiguration of physical mall spaces and we see this trend even after holiday-induced spending in Q4 2023.


More MICE facilities

People are now more willing to attend face-to-face meetings. Corporations, business groups, and even families have been holding in-person events especially after the government relaxed restrictions on face-to-face meetings and dropped mask mandates.

Hotel developers and operators should assess the future demand for meetings, incentives, conferences, and exhibitions (MICE) facilities given the segment’s potential for a strong rebound. This should also be aligned with the government’s thrust of modernizing existing and building new airports across the country. 

The Tourism department is also priming the Philippines as a major MICE destination in Asia, and this should enable the country to corner major global MICE events and further boost tourist arrivals and spending across the archipelago.

Koreans are back, dominating arrivals

Data from the Department of Tourism (DOT) reveal that foreign arrivals as of 10M 2023 reached 4.4 million, already higher than the 2.65 million arrivals recorded in 2022. Among the top source markets during the period were South Korea, USA, Japan, China, and Australia, covering 58 percent of arrivals. By end-2023, the DOT expects international visitors to reach 4.8 million, still far from the record-high 8.3 million arrivals in 2019 but 453 percent higher than the paltry 1.5 million in 2020. The Tourism department has launched its new tourism slogan, “Love the Philippines” to entice more tourists to visit the country and reach its target of 12 million arrivals by 2028.

Improving infra to benefit hotels

Colliers recommends that developers and stakeholders maximize opportunities from public and private sectors’ initiatives to attract more domestic and foreign travelers. In our view, the DOT’s push to boost domestic tourism and the recovery in foreign arrivals should stoke demand in the country’s leisure sector and lift hotel occupancies and daily rates.

The leisure sector should also benefit from the development and improvement of infrastructure projects such as airports and roads. We believe that these public projects should provide opportunities for developers to build more hotels and MICE facilities in emerging tourist spots across the country. 

In our view, the country’s infrastructure network should continue improving to support the Tourism department’s goal of attracting more foreign tourists and making the Philippines a MICE hub in the region.


Expansion of industrial parks

Colliers sees the completion of about 560 hectares (1,380 acres) of industrial space in southern and central Luzon from 2023 to 2025.

We believe that the expansion of industrial spaces in central and southern Luzon is a plus especially for manufacturers that are planning to open facilities in the Philippines. These facilities give manufacturers a gamut of options. In our view, this is particularly important for the foreign manufacturers that the Marcos administration is luring to establish operations in the Philippines.

EV as a sunshine industry

Colliers recommends that developers explore sunrise industries such as electric vehicles (EVs), a new priority of the Philippine government. We are seeing sustained interest from electric vehicle (EV) firms looking for industrial space. Ayala Group recently partnered with US-based Zero Motorcycles for the production of EVs within Laguna Technopark. Meanwhile, Australia-based EV battery manufacturer STBatallion is expanding in Filinvest Innovation Park-New Clark City (FIP-NCC) in Tarlac for its lithium-ion battery facility.

During his trip to China in early January 2023, President Marcos invited manufacturers of EVs to invest in the Philippines. The demand for EVs should be supported by President Marcos’ issuance of an executive order removing tariffs on EVs and their parts.

US CHIPS Act to chip in to industrial take up

Greater inflow of semiconductor investments is likely to influence industrial space absorption in northern and southern Luzon. Data from PSA show that in 2022, semiconductors accounted for USD35 billion (P2.0 trillion) out of the country’s total electronics exports of USD46 billion (P2.5 trillion).

In our view, the implementation of the United States’ CHIPS and Science Act of 2022 which intends to enhance America’s research and semiconductor manufacturing will likely entice more semiconductor firms to expand in the country. American semiconductor company Texas Instruments Inc. (TI) is considering to invest up to USD1 billion (P57 billion) for the expansion of its facilities in Clark, Pampanga and Baguio.

Rising interest from the Japanese

The Philippines is receiving renewed interest from Japanese manufacturers. The current administration has highlighted the government’s efforts to attract more Japanese investors. Earlier, the government reported that more than USD10 billion (P570 billion) worth of investment pledges were generated during President Marcos’ visit to Japan.

PEZA disclosed that Japanese investors remain keen on investing in the country. The investment promotion agency cited the continuous expansion of existing Japanese locators particularly in the sectors of chemicals, automotive and automotive parts, computer and optical products, and transport and logistics.

Among the Japanese locators which are expanding in the country include NIDEC in Subic Bay Freeport, and Kurabe Industrial in LIMA Estate in Batangas.

Integration of township components into industrial parks

Industrial parks should also feature township components including residential and commercial developments. In our view, master planned communities that offer industrial spaces and warehouses will remain attractive given the pavement of roads, cheaper utility costs, as well as customization of warehouses and related facilities.

Among the industrial parks which are located within integrated communities include AboitizLand’s LIMA Estate, Pueblo de Oro’s Light Industry and Science Park IV in The Townscapes Malvar in Batangas, and Filinvest Land’s Filinvest Innovation Park in Ciudad de Calamba in Laguna.


Flight-to-quality and sustainability to dominate firms’ leasing strategy

Based on Colliers’ Q3 2023 data, several companies implemented flight to quality/cost strategies. Among these are traditional and outsourcing firms that took up spaces in Fort Bonifacio, Makati CBD, and Ortigas CBD. These firms took advantage of a market that remains tenant-leaning and maximized the opportunity to lease new, high quality office spaces in major business districts at lower rents.

Given the prevailing market conditions, opportunities remain for tenants to implement flight-to-quality strategies at a lower cost due to decreased rents brought about by the pandemic. In our view, now is an opportune time to secure space in locations with a substantial supply of new and quality office spaces. Given the current stock of vacant spaces and new office towers to be completed in the next 12 months, we encourage tenants to consider office spaces in Fort Bonifacio and Ortigas CBD.

Occupiers may also consider flexible workspaces in their flight-to-value strategy. Colliers encourages occupiers to review their real estate strategies ahead of lease expiry to take advantage of high vacancy in the market, especially with our still elevated office vacancy forecast for 2023 and 2024.

Sustained demand for office 

space outside Metro Manila

In 9M 2023, Colliers recorded 149,500 sqm (1.6 million sqft) of provincial transactions, up from 145,000 sqm (1.6 million sqft) posted a year ago. Colliers recommends that developers complete delivery schedules of their projects as we have observed increasing inquiries from outsourcing firms especially in Iloilo, Bacolod, Bulacan, and Laguna.

Meanwhile, we also encourage developers to be on the lookout for potential demand in key cities such as Iligan, Dagupan, Urdaneta, Malolos, General Santos, Tarlac, Cabanatuan, and Puerto Princesa as these locations are touted as high potential areas for transformation into “digital cities” by 2025 according to IBPAP. Colliers continues to receive leasing queries for these locations.

Rents could soften in locations with above-average vacancy

In Q3 2023, average office lease rates in Metro Manila dropped by 0.5 percent QOQ. While some business districts (i.e. Fort Bonifacio and Makati CBD) continue to see a recovery in rents, other submarkets with a significant amount of available spaces such as the Bay Area and Alabang (vacancies of 36.5 percent and 29 percent as of Q3 2023, respectively) are likely to experience further decline in rents. In 2023, we project rents to drop by another 2 percent, after declining by 37 percent from 2020 to 2022.

Greater focus on tenants’ ESG and DEI goals

With the heightened importance on sustainability and inclusivity in the workplace, landlords must align with their tenants’ Environmental, Social and Governance (ESG) and Diversity, Equity and Inclusion (DEI) objectives.

Colliers encourages landlords to be more proactive in implementing and promoting ESG and DE&I elements within building amenities and common areas. This can be in the form of green features and certifications, landscaping, renovation of shared facilities, and landlord-initiated events that support the wellness and productivity of employees.