Amid the global gloom over COVID-19 (novel coronavirus) that continues to escalate and claim lives worldwide, the real estate industry remains positive and optimistic.
As for COVID-19 effects on real estate, Catherine Ko, executive vice president of Federal Land, Inc. and president of Sunshine Fort North Bonifacio Realty Development Corporation, stresses, “As employees are a big asset, the company is conducting a massive information- sharing campaign. We’re not feeling the effect yet. But certainly, we don’t want our construction workers to be affected by the virus.”
Joey Bondoc, senior manager for research, Colliers International Philippines, shares, “Prior to COVID-19, the market was robust. There will definitely be a hit, especially in the hotel segment.”
Ko points out, “The timing of the outbreak during Chinese New Year partly minimized its effects on real estate production and project completions. There’s not a lot of impact because it happened in China during the Chinese holidays. The plants were really closing down.”
However, this is not to say that real estate is virus-resistant. With the month- long lockdown, open houses and project launchings have been put on hold.
The Rise Of Provincial Cities
So far, most of COVID-19 cases are in Metro Manila, where majority of the property seekers on Lamudi come from. But there are other regions on the rise, with provincial cities such as Cebu City and Davao City making it to the top 10 locations of property seekers in the first two months of 2020. Thus, as Metro Manila tries to curb the spread of COVID-19, investors and property seekers can turn their attention to the other booming hotspots. Worth keeping an eye on is Cagayan de Oro, which is on the verge of a real estate explosion. This next-wave city (second only to Davao City) joins the list of places to watch for in terms of real estate investments, particularly before property prices reach Davao levels.
Over in the Visayas region, the counterpart of CDO as another viable hub of investment is Iloilo, according to Lars Wittig, International Workplace Group country manager for Philippines, Vietnam, Cambodia, Thailand, South Korea. “Iloilo has generations who have accumulated wealth, and the same wealth is now being reinvested and creating great jobs in partnership with national and international investors.”
The other rising stars in the real estate firmament (aside from Davao, Cebu, and CDO) are Bacolod, Pampanga, Cavite, Laguna, and Batangas.
“We’re starting to move outside Metro Manila because it’s already congested here,” asserts Ko. “There are many developments outside Metro Manila. However, when you allow people to live on the outskirts of the metro, their places of work have to be accessible. So, now, the trend is master-planned communities or townships where you can live, work, play. There’s also a school within the community or nearby so the children can spend less time on the road and more time studying. This also solves the traffic problem.”
Meanwhile, Santos Knight Frank, a leading real estate service company, identifies the seven key trends that will shape the real estate industry in 2020.
- THE REIT YEAR. Real Estate Investment Trusts (REITs) will unlock a number of opportunities in the property market, such as greater access to real estate investment and the revitalization of capital markets.
Says Rick Santos, chairman/CEO, Santos Knight Frank, “REITs bring about a significant opportunity to democratize the Philippine property market, allowing the small investor to participate in high- value real estate assets, alongside major corporate institutions. REITs have the power to sustain long-term growth for the Philippine economy through investments.”
Kash Salvador, associate director for investment and capital markets, Santos Knight Frank, predicts, “We anticipate that REITs will drive an increase in acquisition, consolidation, and property development activities across the Philippines in the coming years. New capital raised by developers through REITs will enable expansion of the real estate sector not only in Metro Manila but also in the provinces and thus generate jobs across many sectors.”
He adds, “It is a good time to list properties in REITs and take advantage of these high values that the market is experiencing now.”
- BPOs, A MAJOR DRIVER. “In 2020, we expect BPO demand to be strong, despite the limited amount of PEZA- accredited office space,” notes Morgan McGilvray, senior director, Occupier Services & Commercial Agency, Santos Knight Frank. “BPO demand is strongest in Bonifacio Global City and Pasay, where rents should be going up. Conversely, Ortigas and Quezon City may have more supply than demand, and rents will stay flat in those areas as the vacancy rates increase.”
In general, the BPO industry will remain to be a major driver of demand for office space, growing by three to seven percent annually, according to a joint research by IBPAP and Everest. The fastest growth in terms of employment between 2019 and 2022 is seen in the healthcare BPO (6.8 to 10.2 percent) and animation and game development (6.8 to 11.7 percent).
From 1.23 million direct hires as of 2018, the entire Philippine BPO industry is expected to support up to 1.57 million by 2022.
- INCREASE IN CO-WORKING SPACES. The last few years saw an explosion of co-working brands (where workers of different companies share office space) in Manila and beyond, such as Metro Cebu, where it is estimated that about three percent of the office market constitutes co-working spaces, spread across Cebu IT Park, Cebu Business Park, and selected buildings on the fringes.
More site launches are expected this year, such as SPACES, which recently launched a franchise partnership model.
All these are driven by the demand from freelance workers, startup companies and entrepreneurs, and BPO firms urgently needing a plug-and-play setup.
- NEW FOCUS ON SUSTAINABILITY. With the real estate industry becoming increasingly aware of its environmental impact, more and more property owners are turning to green design, solutions, and systems, such as LEED (Leadership in Energy and Environmental Design) in constructing and operating their buildings.
To date, there are more than 300 buildings in the Philippines that are implementing LEED guidelines. More tenants are adding LEED certification to their requirements in selecting office spaces.
Not only do LEED-certified buildings carry environmental benefits, they also position properties to the premium side. For instance, LEED-certified office buildings in BGC, on average, command 12.5-percent higher lease rates than non-LEED- certified buildings.
- THE NEXT WAVE OF GROWTH. The country’s robust e-commerce market, with its increasing need for warehouses and distribution centers, continues to fuel the industrial and logistics real estate sector. The next wave of growth is in the provincial areas to the north and south of Metro Manila. The areas of Calabarzon and the corridors of NLEX-SCTEX-TPLEX in North Luzon are prime spots for logistics and industrial estate to grow. These could be the next hubs for distribution centers and warehouses.
- THE GROWTH OF MANILA’S PRIME RESIDENTIAL MARKET. In Knight Frank’s Prime International Residential Index, Manila ranks eighth highest globally and third highest in Asia. The growth in the prime residential market in Manila is driven by a tight supply of luxury and high-end properties, increasing number of Filipino ultra-high net worth individuals (UHNWIs), and demand from foreign buyers.
Three projects are slated in the first quarter of this year: The Velaris Residences, a high-end development by Robinsons Land and Hongkong Land; Sonora Garden Residences by Robinsons Land and DMCI Homes; and Avida Towers Parklinks.
- CO-LIVING SPACES AND THE RISE OF THE MICRO- STUDIO. With the traffic congestion in Metro Manila, co-living spaces have become the most viable solution for employees and young professionals working within or near central business districts, without having to pay premium apartment leases or buy condo units.
Among the main players in co-living spaces are SM’s MyTown and Ayala’s The Flats, set either within CBDs or on the fringes of business hubs.
Various forms of affordable accommodations have also been introduced, such as the micro-studio. Unlike the multiple-occupant model of co-living players, a micro-studio rental apartment is built for a tenant who requires privacy. It can average around 11 square meters in size. AboitizLand and Point Blue recently sealed a partnership that drives this category
Overall, for the real estate industry, the only way to go is up!