The recovery of the Philippine market in the real estate industry has become clearer during 2022 with the increase in vaccination rates as the COVID-19 pandemic started to die down. Several countries have opened their borders this year, boosting the hotel and hospitality sector due to tourism being revived.
With all the pent-up demand from consumers, it was predicted that this will assist the recovery of the office, residential, and industrial sectors of the real estate industry. Overall, the main drivers for the real estate industry are on-site work arrangements and tourism.
On the Office Sector
During the first half of 2022, office leasing was expected to decrease. And due to election results, it was anticipated that leasing activity will be slowing down as investors and landlords hold leasing decisions due to possible regulation changes based on the new administration. On the other hand, as the new government has more or less settled into office, office leasing activity has gradually resumed coming into the second half of the year. This contributed to the consistent increase of office leasing during the second half as more companies have gotten back to on-site work arrangements. It is anticipated that more leasing queries are to materialize coming 2023, making the recovery of the office sector more apparent in the months to come.
Apart from the recovering leasing activity, there is a developing preference for more sustainable office spaces. Sustainable office buildings are said to provide natural lighting and improve air quality amongst other things, based on Colliers’ research. A healthier and more sustainable workplace was said to contribute to a healthier and more productive workforce.
On the Residential Sector
The vacancy rate of residential condominiums have decreased consistently throughout 2022 as on-site work arrangement became more prominent. There was a rise in demand from working professionals and university students to lease houses near their employment and schooling areas.
During the first half of 2022, vacancy levels for upscale and luxury units increased as rent price valued to roughly Php 1,015 per square meter. Land and rent values are expected to increase from 2022 to 2023 as major infrastructures like NLEX SLEX Connector, the North-South Commuter Railway, and the Central Luzon Link Expressway are anticipated to be built.
Furthermore, with the aforementioned key infrastructure projects, there has been more interest in properties outside of Metro Manila, namely in provinces like Bulacan and Cavite.
On the Hotel and Leisure
Tourism has become the key driver of recovery for the real estate sector as more countries have opened their borders to welcome visitors during 2022. Revenge travel among travelers has raised hotel occupancies of chosen properties around the country.
Trips have significantly increased during the latter part of the year as limitations have become more relaxed, with little to no quarantine requirements for travelers.
Malls and other establishments have benefited from the increase in travels as more people visit malls to shop. Apart from revenge travel, revenge shopping was also done by the masses to ease their pent-up demand from the last two years of the pandemic. This is especially evident during the holiday season of 2022 with malls being packed by mall-goers.