Resilience of real estate in the face of a pandemic

“It should be business as usual for property investors,” said Professor Enrique Soriano III, Wong + Bernstein Advisory Group’s executive director, in a recent interview on the effects of the COVID-19 pandemic and enhanced community quarantine (ECQ) to the real estate industry. For those interested in investing in property, “managing the risk as a result of the current uncertainty is the only hurdle for property players to overcome.”

Even after local economists (such as those from the UnionBank of the Philippines) and global firms (JP Morgan Chase and JLL Global) lowered their local GDP forecasts because of fluctuating real estate investment, Soriano is one of the people who would still “bet their last centavo on real estate.”

The local real estate market is overall seen to be quite resilient, with the huge unmet demand for housing a large contributing factor. It is seen to continue being a local, long-term play with attractive relative returns compared to other asset classes. “Behaviorally, in any downturn, the real estate market will naturally correct itself. In due time, it will start picking up again,” Soriano added. “The upside is clear: it is a very resilient sector struggling to cover more than six million housing units; all these housing requirements are based on real demand.”

According to a Cushman & Wakefield report dated February 2020, commercial real estate is the most resilient owing to the long-term nature of properties that will allow losses to be regained sooner than later. In addition, real estate services company Santos Knight Frank (SKF) identified key trends that will help shape the industry as a whole throughout the year. These include office sector-driven growth, mainly from the BPOs as they expand within and outside the metropolis. Real estate companies like AboitizLand continue to prepare for this expected upswing with its continuous planning of integrated townships such as LIMA Estate in Lipa, Batangas, where it plans to develop commercial buildings and sell commercial lots.

The industrial and logistics sectors are also seen to expand outside Manila with the increasing demand for warehouses and distribution centers, especially as e-commerce booms. The hotspots for expansion are CALABARZON, Cebu, and in the NLEX-SCTEX-TPLEX corridors in North Luzon.

AboitizLand, one of the premier property developers in the country, remains prepared for this inevitable expansion amid the pandemic with industrial hubs like LIMA Technology Center in Batangas, and MEZII and West Cebu Industrial Park (WCIP) both located in Cebu.  Plans are underway for LIMA and WCIP expansions to create additional inventory to take advantage of this demand.

Opportunities are also present for homeowners looking to invest in, live in and rent out properties. With buyers wary of current stock values, relatively stable real estate investments are becoming more attractive.

According to SKF, real estate investment trusts or REITs, which may help democratize the Philippine property market by allowing smaller investors to participate in high-value real estate assets, are seen to pick up this year.

Environmentally conscious developments will also become more attractive to people looking for low-density areas that offer house-and-lot type properties with green, open spaces. Best-of-both-worlds developments, which are located away from but accessible to dense Metro Manila cities, are eyed as the best in this sector. AboitizLand developments such as Seafront Residences, The Villages at Lipa in Batangas, and Ajoya, a mid-market horizontal development in progressive areas in Central Luzon, are examples of these developments.

And for those wishing to stay in the bustling city, Metro Manila remains a prime residential market especially with the rising popularity of co-living spaces. Micro-studios, such as Point Blue Microstudios, built in partnership with AboitizLand, will increasingly become the accommodation of choice for employees and young professionals who work in CBDs but require the cozy privacy of a studio.

The general consensus from various sources is to buy property now and not wait for economic recovery from COVID-19. People with cash on hand, especially, may benefit from being able to negotiate for better, discounted prices on select properties.

For more information, visit www.aboitizland.com.

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