Article by: Janine Alexis Miguel | Photo by: J. Gerard Seguia
THE Philippines' real estate industry is expected to return to its pre-pandemic levels due to increasing demand across various sectors, especially for office spaces, Lobien Realty said in its midyear outlook.
Lobien Realty Group Chief Executive Officer Sheila Lobien said despite the challenging environment at the start of 2024, the second half prospects are "very positive" as transaction volumes rise.
The vacancy rate stands at 18 percent while rents have declined by 12.3 percent year on year from P1,130 per square meter (sqm) to P990/sqm, the group's midyear report said.
It noted that the softening in rent is a logical impact of having 2.3 million sqm of unleased or vacant office space and the 1.5 million sqm additional supply scheduled to be completed from 2024 to 2028.
Lobien said that a lot of vacant spaces is still better compared to the second quarter 2024 and the same quarter 2023, indicating a 42 percent take up as of today.
"That's a lot compared to last year. So that's already a big take up this year and every year, it's actually improving," she said.
"So this is quite good. And we see that the next two quarters will be even better," Lobien added.
On the other hand, the expected decrease in policy interest rates in the last quarter of the year could also help the industry's recovery.
Among the sectors, the business process outsourcing industry is seen to continue its growth trajectory and will require close to 400,000 additional full-time equivalents (FTEs) requiring 1,200,000 sqm of office space for the next four years.
"However, if the aggressive trend line is achieved, an additional 200,000 TEs will be required, and the corresponding office space requirement will increase by 600,000 sqm," said Lobien.
In addition, demand for co-working space or flexible office industry is also expected to drive demand for office space.
More than 240,000 sqm are currently being occupied by flexible office companies and more than 100 co-working offices have set up shop in the Philippines in the past three years.
"We expect this trend to continue, although at a slower pace, over the next three years," she said.
On residential buildings, Lobien said that about 10,000 residential condominium units could be added in 2024.
Citing data from the BSP Residential Real Estate Price Index, condominium units registered the highest price increase by 10.2 percent in the first quarter of 2024. Prices for all house types also increased by 6.1 percent.
In terms of demand, a significant shift from the National Capital Region to CALABARZON as a residential destination is anticipated, Lobien said.
