The Bangko Sentral ng Pilipinas (BSP) is well aware of the impact real estate can have on the Philippine economy. In order to better monitor the sector, the central bank announced that it is launching a Commercial Property Price Index that will operate similarly to the Residential Real Estate Price Index.
According to BSP Governor Benjamin Diokno, the new index will be rolled out sometime this year although no specific timeline was released. The Commercial Property Price Index will allow the bank to watch how the sector is performing, identify potential risks and better formulate future policy. It plans on using the two indexes in tandem ensuring BSP has a more in-depth picture of the country’s property market.
“Together, these two indicators may be used to monitor the developments in the Philippine property sector as a whole and their linkages with the other sectors in the economy,” Diokno told the Philippine Inquirer. “Using [property price] data, the BSP is able to measure and monitor the banking sector’s exposure to the residential property sector, monitor developing price and credit trends, and develop timely and appropriate policies, together with other regulatory agencies, if needed, to stem the rise of systemic risk.”
The Commercial Property Price Index will monitor how prices are changing in the Philippines and is seen as a useful tool in identifying potential market bubbles before they happen.
It’s an interesting time for Philippine commercial property market
After years of growth fueled by BPO firms and offshore gaming operators, the Philippine commercial property sector now finds itself at an interesting juncture. The COVID-19 pandemic has caused many companies to rethink office setups in general.
Santos Knight Frank noted that the commercial sector had favored landlords with low vacancies and strong demand pushing up rents for nearly a decade. However, lockdown measures put a halt to that with tenants currently having the upper hand ahead of employees returning to the office.
Additionally, many businesses now realize they require more geographical diversity to help them during future pandemics. Also known as viral diversification, this could cause demand for office space in secondary cities to rise while lessening the need for commercial property in Metro Manila.
