More office, retail and residential supply is coming to the Philippines this year and that will put pressure on old buildings. According to JLL Philippines, many structures are now outdated and unable to meet the needs of tenants, especially ones focused on a post-pandemic future.
“Over 50 percent of buildings in major cities are over 20 years old and most have not been upgraded to meet post-COVID requirements. As vacancy rates increase and rental rates decline, a ‘do nothing’ approach will not preserve or enhance value,” JLL Philippines Head of Project Development and Services Calum Swinnerton told BusinessWorld. “Health and wellness, human experience, sustainability, and technology are areas whose enhancement focuses changed since COVID-19 began.”
For developers with old buildings in their portfolio, asset enhancement will be critical moving forward. That’s because more new launches are coming after two years of relative quiet across the property sector.
“(We) expect the real estate market to move with cautious optimism in 2022, following the performance in leasing activities last year. Significant supply expansion is expected to exert pressure in 2022 on office, retail, hospitality and residential sectors,” JLL Philippines Head of Research and Consultancy Janlo de los Reyes said.
Related: Commercial real estate in the Philippines expected to rebound this year
The consultancy believes 2022 will be a good year for the Philippine property market in general. While things may be slow until after the looming elections, the firm expects activity to be better than 2021.
“This year will definitely be more positive than last year,” JLL Philippines Country Head Joey Radovan stated. “The only thing that may slow down transaction decisions is the elections since clients are interested in how policies and regulations shaping real estate may affect their operations.”
Read More: 4 things to know about Philippine real estate investment in 2022