The outlook of the retail, hospitality and office real estate sectors in the Philippines is positive with these expected to continue on an upward trajectory in 2023, according to Santos Knight Frank. The consultancy noted a resilient and stable economy, along with sustained growth of OFW remittances and household spending, should negate any potential issues that arise from interest rate hikes and inflation.
If you were out buying gifts during the Christmas season, you may have noticed relatively full shopping centers. Santos Knight Frank found mall occupancy levels across Metro Manila closed at 93 percent last year, close to the 96 percent seen in the fourth quarter of 2019, the last pre-pandemic three-month period.
Take up for retail space is being driven by a six percent increase in consumption fueled by the Philippines’ notable GDP growth in 2022. This is a positive development given just how hard COVID-19 restrictions hit the sector.
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Over in hospitality, there were 2.65 million international tourist arrivals to the Philippines in 2022. The country still has work to do in terms of getting more people to come, but firms are confident of this happening. Research from Santos Knight Frank found that approximately 2,692 new hotel rooms will be delivered in Metro Manila alone between now and 2024.
“Brick-and-mortar retail and hotels were some of the most severely affected real estate sectors during the pandemic. Now that travel and mobility restrictions have been lifted, we are seeing the resurgence and ‘unfreezing’ not just of market activity but also development and expansion of players in these sectors,” Rick Santos, Chairman & CEO of Santos Knight Frank, explained.
The situation is a little more complicated in the office sector as businesses come to terms with their needs in a post-pandemic world. Leasing activity is expected to increase this year, although the market remains in favor of tenants.
“We expect more leasing activity this year as a result of greater outsourcing requirements from developed economies, the availability of quality office space and companies adjusting their work setups. While we will continue to see some downsizing of footprints for Philippine headquarter companies, we still expect to see an overall net positive take up in 2023 driven mainly by the BPO sector,” Morgan McGilvray, Senior Director for Occupier Services at Santos Knight Frank, noted.
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