The Philippine real estate industry remains volatile and the slower-than-expected recovery can be attributed to three main factors: the lingering impact of the pandemic on commercial office, retail and residential markets; the higher-for-longer inflation and interest rates and the continuing geopolitical conflicts in Ukraine and the Middle East that have resulted in global uncertainties that have impacted global economic recovery.
The pandemic has opened mixed and work-from-home arrangements that have affected office space demand and commercial and residential take up in Metro Manila.
Office vacancy rates had inched higher to 20 percent in Q1 2024, although leased rates have significantly improved year-on-year for the same period—25 percent in Q1 2024 versus 4 percent in Q1 2023. The increase can be attributed to new supply in the market, pushing total available supply to 660,000 sqm versus 360,000 sqm in the same period last year.
However, average rent has remained at P1,100 per sqm level, which underscores the resiliency of the market even in the face of muted demand.
Provincial office markets have a higher vacancy rate at 28 percent, with total available supply of 230,000 sqm, while average rent being maintained at P600 per sqm level.
The high vacancy rates have also affected the retail and residential sectors, particularly the condominium units, as shown by a -14.5 percent decrease quarter-on-quarter and -0.3 percent year-on-year, based on the Bangko Sentral ng Pilipinas (BSP) Residential Real Estate Prices Index as of Q4 2023.
However, single detached/attached houses and townhouses grew in NCR and in the provinces (except for duplex, which registered a correction in Q4 2023), which bodes well for the residential sector.
Also, one of the bright spots in the real estate industry is the continuing build-up of townships or mixed-use developments, where 40 percent of these developments are in Metro Manila and 60 percent in the provinces.
Townships, especially those outside Metro Manila, are expected to counter the mixed/work-from-home office arrangements as employees can now report to their offices located at a convenient distance with no issues on traffic and additional costs. Source: Inquirer.net
