“The PH real estate market will enter a 20 year bull cycle next year”

Emerging from the disruption caused by the COVID-19 pandemic, the Philippine real estate market is expected to resume in 2022 a new bullish cycle that could last at least two decades, real estate experts at Leechiu Property Consultants (LPC) have said.

In the coming year, LPC CEO David Leechiu said demand for office space will most likely rebound to 2016 levels or to the level before the games operator’s hyper-growth years. Philippine offshore (Pogo) from 2017 to 2019, with information technology and business process management (IT-BPM) as the main driver of demand in the coming years.

Leechiu predicted that in less than 10 years, tourism could be the third pillar of the Philippine economy which could be more important than one of the first two: remittances and IT-BPM. These in turn are seen as fueling the fourth stage – more robust consumer spending – through improved consumer wealth.

The real estate market recovery began in 2004 and has continued since then despite all the political upheavals, volcanic eruptions, floods, election cycles, coup attempts, the global financial crisis and other challenges. , Leechiu said.

” Many countries [structural] the issues have been resolved somewhat, and many more issues need to be resolved. But those that we have corrected over the past 20 years will propel us on the path to prosperity and the future. The problems we are going to solve will get us through the next 20 years of prosperity, ”Leechiu said at a press briefing on Wednesday.

Per capita income doubled

As the country’s per capita income has doubled in the past 20 years, he said per capita income will most likely double in less than 20 years.

In 2020, the per capita income of the Philippines was almost $ 3,300.

On Pogos, Leechiu expects the industry to recover in the next three to five months. “Some companies may still be contracting, but based on our pipeline that we are seeing, more and more customers in the Pogo industry are asking us for more space, not just in offices, but more. still important in residential spaces, which is a very good sign, ”said Leechiu.

With the country’s borders reopening, Leechiu said foreigners could resume populating the country’s residential and office sectors.

In 2021, LPC expects office demand in the Philippines to exceed 540,000 square meters, at least 39% more than the previous year. In the fourth quarter alone, office take-up jumped 74% year-on-year to 160,000 square meters.

Vacancy rate

Leases not renewed in the fourth quarter resulted in a current vacancy rate of 18 percent in Metro Manila, particularly in the former Pogo hot spots in the Manila Bay area (27 percent) and in Quezon City (24 percent). Vacancy rates in Makati City and Bonifacio Global City hover at more manageable levels of 12% and 13%, respectively.

“Despite the challenges of the rental market, the recovery is looming and is on track to reach pre-pandemic levels. It is in the interest of the market that Filipino real estate owners tend to hold their positions with a longer-term view and are therefore not as affected by short-term fluctuations in returns, ”said Mikko Barranda. , director of LPC for commercial leasing.

Tam Angel, director of investment sales for LPC, said given improving economic conditions and declining COVID-19 numbers, land values ​​in all business districts are likely to continue to rise. in 2022 and even would accelerate over the next few years, like what was seen in 2008-2010 in the aftermath of the global financial crisis. Angel added: “2022 could very well be the first in years of running the bulls.”

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