December 7, 2024
[Amy Remo - Writing Editor, Property Section at Philippine Daily Inquirer] Cautious recovery, innovation, and resilience are expected to define the Philippine real estate landscape in 2025.
Developers are seen to continue recalibrating to meet shifting demands with suburban townships and sustainable horizontal developments, while unsold Metro Manila condominium inventories will likely temper new launches. The industrial and logistics sectors, buoyed by the e-commerce boom and decentralization, is seen to maintain their resilience.
As environmental, social, and governance (ESG) compliance gains traction among global occupiers, the demand for green-certified buildings is projected to rise. Meanwhile, the hospitality sector anticipates a resurgence, driven by increased tourism and foreign investments in hotels and resorts. Infrastructure expansion, a growing middle class, and technological advancements present additional opportunities for the sector to grow.
The path forward, however, is far from unencumbered.
Geopolitical tensions, the Philippine offshore gaming operators’ (POGO) exodus and its impact on the office and residential markets, as well as the persistently high interest rates continue to cast a shadow of uncertainty on the industry, testing market resilience, investor sentiment and even consumer confidence. Mitigating or at least navigating these headwinds will demand a combination of agility and innovation on the part of property developers.
To provide a clearer picture of the road ahead, Inquirer Property asked industry experts for their fearless forecasts and insights as to how the sector will continue to evolve to meet the changing demands of a dynamic market amid a steadily recovering economy. Here’s what they have to say.
CEO, Lobien Realty Group Inc.
The industrial submarket will sustain its high performance and growth, with vacancy rate at 8 to 10 percent. The growth in e-commerce, projected at $20 billion in 2023, will reach $33 billion in 2027, while e-commerce users will reach 15 million in 2025 and will double to 32 million in 2029, ensuring that the underlying factors of growth for this submarket will continue to be dependable and durable.
The hospitality market is expected to register significant recovery as the number of tourist arrivals of 7.7 million in 2024 will grow to 8.3 million in 2025 and reach 9.4 million in 2028. The current 336,000 hotel rooms across the country will need to grow to 456,000 rooms by 2028 to accommodate the growth in demand.
The office space market will continue to rely on the IT BPM industry’s performance to push the 19 percent vacancy rate down to more manageable levels. Hopefully, the IT BPM industry can create 160,000 new jobs annually over the next four years to hasten the office submarket’s recovery. The slow global economic recovery as a result of high inflation and geopolitical tensions, work-from-home arrangements, and the exit of POGOs resulted in high vacancy rate.
As the global and local economy continues to recover, this submarket is expected to recover as well as traditional companies start to recover and expand.
Residential. The higher-for-longer interest rate, which currently stands at 6 percent, will have to be lowered further to re-ignite residential take-up. The exit of POGOs and the 20 percent vacancy rate in the condominium submarket will require some softening in prices and more attractive payment terms to push the excess inventory. Stable growth in OFW remittances, projected by the World Bank to hit $40 billion in 2024, will continue to support this submarket.
The retail market will mostly rely on the growth in residential, office and hospitality markets and the growth in household consumption, which is expected to hit 6.2 percent in 2024 and 5.9 percent in 2025.
The higher-for-longer interest rate of 6 percent needs to go down further to be close to pre-pandemic levels. Geopolitical conflicts will impact global economic growth and will pose threats to inflation, international trade, and supply chain structures.
For the tailwinds, the Philippines is quite fortunate to have a resilient economy that posts an annual growth of at least 6 percent. This benefits the real estate industry. Government spending on infrastructure, especially on road networks, continues to provide residential and township locations for developers. Finally, the positive forecast for the IT BPM and OFW remittances will continue to support the office and residential submarkets in the next several years.
The Philippines is not new to green developments as it currently holds 423 LEED certifications and registrations with 42 LEED Platinum and Gold-certified buildings.
Commercially, many global companies looking for office space require green buildings as part of their ESG compliance and for the Philippine office space market to be competitive, this requirement needs to be addressed to stay competitive.
Real estate developers can help empower more communities by identifying growth areas outside Metro Manila.
Provincial locations that have access to a reliable and convenient road infrastructure with sufficient and capable labor supply deserve to have high quality, disaster-resistant townships and residential communities to help democratize economic opportunities across the country. The current concentration of gross regional domestic product (GRDP) in the NCR, which stands at 41 percent as of 2023, needs to be addressed.
Nearby regions, as well as some areas in Visayas and Mindanao, can host the next sustainable cities, townships and residential communities.
Currently, we are already going in the right direction as 60 percent of the township developments in the country are outside Metro Manila. Government help, through necessary fiscal support and infrastructure, will make these developments sustainable and successful.
Article Link: https://plus.inquirer.net/property/ph-real-estate-2025-poised-for-growth-amid-shifting-dynamics/
THE business process outsourcing industry (BPO) will remain a key driver of Philippine economic growth despite US protectionism, the head of a real estate consultancy said, with projected workforce expansions expected to boost demand for office space.
Speaking at Manila Times economic forum on Thursday, Lobien Realty CEO Sheila Lobien projected that 160,000 new employees would join the BPO workforce this year, requiring companies to add an estimate 480,000 square meters of office space.
AFTER facing several challenges in the first half of 2024, the country’s real estate sector is expected to bounce back in the second half of the year.
In its recent Mid - year Report of the Real Estate Industry, Lobien Realty Group, Inc. ( LRG) CEO Sheila Lobien said they are bullish in the second half because of the country’s resilient economy and the positive movements in transaction volume year- on- year ( YOY) across the real estate industry.
Lobien Realty Group is the No. 1 Realty Property Provider in the Philippines. We provide office and commercial spaces, lots and properties for sale/lease in the cities of Makati, Taguig, Pasig, Mandaluyong, San Juan, Pasay, Parañaque, Las Piñas, Quezon, and Caloocan.