There’s no doubt that the Philippines is a rising property investment destination in the region. Foreign developers have expressed interest in investing in the country and some Japanese firms have already partnered with Philippine developers for the development of massive horizontal projects. The Philippines is gradually recovering from the debilitating effects of the pandemic and this economic rebound is buoyed by the country’s young demographics. We continue to be one of the prime spots for outsourcing operations while improving infrastructure networks and industrial segments are likely to support the Philippines’ long-run economic growth prospects. This piece takes a deep dive into the factors that we see sustaining the Philippine property’s luster over the medium to long term.
Growing industrial competitiveness
The Philippine government intends to diversify its sources of foreign pledges and in the process secure more manufacturing investments. The country’s investment promotion agencies (IPAs) have been promoting the Philippines’ competitiveness as an investment hub and this should help the country attract more investments which should positively influence industrial take-up.
Colliers encourages industrial park developers to expand especially in central and southern Luzon to capture manufacturing commitments likely to materialize in the next 12 months. Property firms with an industrial footprint should follow the government’s initiative of attracting more foreign investments from non-traditional trading partners. Developers should also coordinate with IPAs to identify pledges likely to materialize in the near term and take up industrial space.
The continued expansion of the country’s Purchasing Managers’ Index (PMI) indicates that manufacturing activities in the Philippines continue to rise. A PMI score of 50 and higher signifies the expansion of manufacturing activities.
The Philippine government intends to ensure that the Philippines retains or even improves its manufacturing competitiveness to attract more investments. More manufacturing projects should result in greater absorption of industrial space and warehouses and compel developers to expand their industrial presence. This should eventually result in a more dynamic and competitive industrial landscape in the country. We also see this resulting in the creation of more industrial hubs.
Colliers believes that a burgeoning industrial sector is crucial in helping the country achieve upper middle-income status. This should create more livelihood and employment opportunities, especially in the countryside and foster sustainable and inclusive economic growth.
The rise of more attractive locations for property development
Buying a property in the right location is key. As we say in real estate, “location, location, location.” Make sure that you invest in a property that is situated in or near a location with good rental and price appreciation potential. While being in a master-planned community has become a popular option, it is also important to choose a location that is near public transportation and infrastructure projects. These are important especially if you decide to flip or resell your property in the future. Previous Colliers Philippines surveys also showed a rising preference for locations that offer greener and more open spaces.
Colliers believes that outside of Metro Manila, among the most attractive sites for new real estate projects include central Luzon, CALABARZON, Western Visayas, Central Visayas, northern Mindanao, and Davao. There’s a lot of upside potential for these locations and the government’s massive infrastructure program and decentralization thrust should further unlock development opportunities in these high-growth areas.
Property’s low volatility versus other investment options
Philippine apartment prices have low volatility as compared to the stock market. This makes property one of the most viable investment options in the Philippines. This is also one of the primary reasons why we see property investing as a highly feasible investment option in the Philippines. The Philippine property market is also cyclical, wherein average property prices would usually correct during periods of economic uncertainty and turbulence. But as historical data show, prices also recover once the economy and other key economic indicators rebound.
While we see headwinds in the Philippine property market, tailwinds still abound. At this point, we are seeing mixed recovery stories for the Philippine property sectors – office, residential, retail, hotel, and industrial. Developers need to be more agile as they scout for the next growth area and seize opportunities in a property landscape that is rebounding from the disruptions we experienced in 2020 and 2021. With strong macroeconomic fundamentals and greater public-private initiatives aimed at boosting the real estate sector, the Philippine property market is poised for a strong rebound beyond 2024.
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