Leading real estate services company Santos Knight Franks expects the Philippine property market to experience a more gradual recovery in 2021. The predicted turnaround comes after a difficult 2020 which halted several years of growth across the industrial & logistics, office and residential sectors.
“2020 was a challenging year for Philippine real estate and the global property market, but we see the new year as a promising time for real estate sectors such as industrial & logistics, office, residential, REITs and data centers, among others. In general, we expect to see a soft rebound in the real estate market as the economy gradually recovers,” Rick Santos, Chairman & CEO of Santos Knight Frank, explained.
The Philippine residential market will continue to favor buyers, but Santos Knight Frank does predict the sector to improve slowly and steadily over the coming months. Those looking for a new home should be able to secure better deals in terms of price and payment terms as homebuilders look for new ways to stimulate demand.
According to Santos Knight Frank, the office market should also recover although it will not return to pre-pandemic levels in 2021. There remains hope that tenants can return to the physical workplace this year. Meanwhile, some companies, especially those in the BPO sector, will begin searching for new locations and office rightsizing requirements. Office vacancy in Metro Manila rose to 9.8 percent in 2021.
Santos also highlighted a number of other trends that would support the gradual recovery of the Philippine property market moving forward.
“In 2021, macrotrends such as the boom of e-commerce, flexible office setups and continued decentralization outside Metro Manila are likely to continue and contribute to the property market’s recovery,” Santos noted. “In addition, the demographics of the Philippines remain key in driving the real estate market’s long-term performance. The country’s growing population will drive consumption, online retail and the industrial & logistics sector, while its young pool of talent will help retain the Philippines’ place in the global BPO industry as outsourcing increases overall.”
Finally, REITs will also have a role to play in the property market’s recovery. More developers will use this mechanism to generate new capital that can help in funding new projects. Santos pointed to Ayala Land as an example of how this work. Last year, the developer sold a commercial center to the newly formed A-REIT with the proceeds going to projects in Cebu and Metro Manila.