ON GENERAL PROPERTY
Bank exposure in the real estate sector hit a three-year high last June 2020 and will likely continue to increase as Banko Sentral ng Pilipinas (BSP) raised the loan limit from 20% to 25%. This frees up approximately Php1.2 trillion for additional lending.
Lending to property developers increased to an amount of Php2.2 trillion end-June last year, which is 11.2% higher than Php1.98 trillion from 2019.
Loans for commercial real estate amounted to Php1.41 trillion with an 11.9% increase from the previous Php1.26 trillion. On the other hand, residential real estate loans made an increase of 10.3% amounting to Php787.9 billion from the previous Php 714.06 billion.
Property prices, particularly in areas outside of the National Capital Region (NCR), continue to rise with the residential real estate price index (RREPI) increasing by 0.8% to 134.3 in the fourth quarter of 2020 from its 133.3 in the same quarter of 2019. This reflects the movement of Filipino consumers outside of the city to escape the frequent city lockdowns.
Real estate and project finance exposure of Philippine banks are under the watchful eye of the central bank’s Money Board as there are possibilities of the economy heating and asset-quality deteriorating as the pandemic continues.
ON LOGISTICS
According to the Supply Chain Management Association of the Philippines (SCMAP) President Pierre Carlo Curay, the e-commerce market is providing big opportunities for the supply chain and logistics sector of the country.
The e-commerce market revenue is said to amount to 4.42 billion USD this 2021 with an expected annual growth rate of 16.7%, which will result in the market volume of 7.6 billion USD come 2025.
With the growth in e-commerce, there is an expectation that a lot more will go into warehousing and more fulfillment centers will be established to accommodate the ever increasing demand.
The new normal is seen to be heavily reliant on digitalization, making the supply chain ever more complex but greatly beneficial for stakeholders in this new ecosystem of digitization.
The logistics cost of the Philippines, due to its complexity, is currently at 27.16% which is higher than Indonesia (21.40%), Vietnam (16.3%), and Thailand (11.11%).
Curay points out that this will change with the Build Build Build program as it will improve the overall dynamic of the logistics industry.
ON OFFICE
Real estate investment trust (REIT) creates a growing interest among the big real estate companies in the Philippines. With the successful debut of Ayala Land, Inc. and DoubleDragon Properties Corp. at the stock exchange with their REIT listings, other companies such as Filinvest Land, Inc. subsidiary Cyberzone Properties, Inc. and Robinsons Land Corp. subsidiary Robinsons Realty Management Corp. followed suit and filed REIT IPO registrations.
Ayala Land, Inc. is the first in the country to put up their REIT listing on the stock market back in August 2020. DoubleDragon Properties Corp. on the other hand entered the stock market only in March 2021 with a listed Php17.83 billion shares priced at Php2.25 each.
For the newcomers, Cyberzone Properties’ REIT portfolio includes 16 office towers with some having a retail component. As for Robinsons Realty Management Corp., their REIT portfolio is composed of 14 assets accredited by Philippine Economic Zone Authority with over 400,000 sqm of gross leasable area in Metro Manila and beyond the region.
Other companies such as Megaworld Corp. and Vista Land & Lifescapes, Inc. have expressed their interest in entering the REIT market as well.
Current REIT portfolios consist mainly of office projects which prompts the Philippine Stock Exchange (PSE) to encourage companies into including toll roads, warehouses, and hospitals in the list.
ON RESIDENTIAL
The future of the residential market is looking promising as it is reported that there is an improved demand for housing ever since the beginning of the pandemic.
House seekers expressed in a survey that they are keeping their property buying timeframe open with the consideration of making a purchase this year.
The first quarter of this year showed recovery across all price points, especially for high-end properties. This exhibits that those with big spending power along with the strong desire to own a home have the confidence to invest in real estate despite the crisis.
ON HOSPITALITY
According to Claro dG. Cordero, Jr., Director and Head of Research at Cushman & Wakefield, serviced apartments are fairly stable investment vehicles since it provides a secure and stable income for operators given the contracts with long-staying corporate clients.
The business process outsourcing (BPO) industry is seen as another source of its demand as it is projected to continuously grow especially after the pandemic.
Serviced apartments are alternatives to hotels which are fully furnished, and provide housekeeping and laundry services. It is said to be meeting the emerging trends of urbanization and “workactions” according to Cyndy T. Jarabata, the Tajara Leisure and Hospitality Group President.
Demand for serviced apartments are seen to rise as the work-from-home setup becomes more prevalent, making more people detached from the physical workplaces.
ON RETAIL
The retailing segment is expected to bounce back by 2022 to its pre-pandemic level given that retailers resume normal operations by the end of this year. This is considered slower than most of the Philippines’ regional peers.
With the still present virus anxieties, e-commerce will continue to be the significant driving force to the retail recovery for consumers.
Apart from e-commerce growth, there is seen to be a growth in mixed retailers — a hybrid between a supermarket and a convenience store. This concept became more relevant and will continue to be relevant as consumers look for the most convenient way to shop for their needs.
Sources:
Abad, R. (2021, May 18). Housing demand rises despite pandemic-study: Roderick Abad. Retrieved June 04, 2021, from https://businessmirror.com.ph/2021/05/19/housing-demand-rises-despite-pandemic-study/
Agcaoili, L. (2021, May 05). Bank lending for real ESTATE hits 3-year high. Retrieved June 04, 2021, from https://www.philstar.com/business/2021/05/06/2096114/bank-lending-real-estate-hits-3-year-high
Cahiles-Magkilat, B. (2021, May 24). PH retail industry Sales rebounding in 2022 yet. Retrieved June 04, 2021, from https://mb.com.ph/2021/05/25/ph-retail-industry-sales-rebounding-in-2022-yet/
Cordero, C., Jr. (2021, June 1). PHILIPPINE PROPERTY MARKET NEWS - MAY 2021 (Rep.). Retrieved June 4, 2021, from Cushman & Wakefield website: https://www.cushmanwakefield.com/en/philippines/insights/philippine-property-market-news-may-2021
Gonzales, A. (2021, May 19). E-commerce can propel logistics sector growth. Retrieved June 04, 2021, from https://www.manilatimes.net/2021/05/19/business/business-top/e-commerce-can-propel-logistics-sector-growth/873931
Mirasol, P. (2021, May 25). 'Workcations' to fuel SERVICED apartment SECTOR, experts say. Retrieved June 04, 2021, from https://www.bworldonline.com/workcations-to-fuel-serviced-apartment-sector-experts-say/
Valmonte, K. (2021, May 24). REIT listings Signal market confidence - analysts. Retrieved June 04, 2021, from https://www.bworldonline.com/reit-listings-signal-market-confidence-analysts/