Wednesday, May 29, 2024

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Stimulating the Philippine real estate market during a declining economy (part 1)


In the second quarter of 2023, the Philippine economy experienced a lower growth rate than anticipated. The underwhelming growth of 4.3% may make it difficult to reach the goal of 6% growth in 2023.

nd office sectors

In 2022, Colliers Philippines predicts that the Philippine property and office sectors will experience a gradual recovery.ft

During a turbulent time (2020 and 2021), we believe that different types of real estate have experienced varying levels of recovery. The government’s efforts to stimulate the economy for the rest of 2023 will be crucial in enhancing the potential for rebound in these segments.fi
This refers to the commercial, residential, and hospitality industries.

The real estate market in the Philippines is making a comeback, but the rate of progress for the rest of the year may be hindered by a poor economic performance in the second quarter of 2023. It will be intriguing to observe how both domestic and foreign economic challenges will influence the growth and development of the Philippine real estate industry beyond 2023.

The cost of living in residential areas has increased.
In the upcoming year, we anticipate the construction of 4,920 fresh housing units, with an increase in 2024 when 9,620 units are projected to be completed – the most significant addition since 2019.

Colliers forecasts that by the end of 2024, there will be 165,700 condominium units in Metro Manila. The Bay Area is expected to surpass Fort Bonifacio as the largest residential center in the capital region in terms of condo availability.

We believe that the slower pace of condominium construction, combined with an increase in residential leasing, will help to decrease vacancy rates in 2023.

In the secondary residential market, the return of expatriates to the country has had a significant impact in areas such as Makati CBD, Rockwell Center, Ortigas Center, and Fort Bonifacio. Our projections show a decrease in vacancy rates from 17.6% in 2022 to 17.0% by the end of 2023, which is expected to result in an increase in residential rents and prices.

2021

In 2021, we are observing an increase in positive attitudes from both businesses and consumers, indicating continued growth.fl

The flow of money sent by Filipino workers abroad, along with steady interest rates, is expected to boost demand for both pre-selling and secondary residential properties in Metro Manila.

prices in the capital continue to soar

Developers are increasingly launching horizontal projects outside of Metro Manila, indicating an assertive approach. This trend is expected to persist as property values in the capital continue to rise.firms search for new sites viable for more house-and-lot and lot-only projects.

Hotel industry experiences resurgence due to continued trend of “revenge travel”.
3rd quarter of

According to the most recent report from the Department of Tourism, the number of tourists visiting the country has reached 2.7 million in the third quarter.fi2021

The first half of 2023 saw a 232% increase in foreign arrivals compared to the 814,141 arrivals in 2021.first half of 2022.

The Tourism department anticipates that the number of tourists visiting will reach 4.8 million by 2023. In 2019, the country saw a record high of 8.3 million foreign arrivals.

2021 fiscal year, our company’s revenue was $1 million

At the conclusion of the 2021 fiscal year, our company generated $1 million in revenue.fi2

In the first half of 2023, the average hotel occupancy in the capital region increased to 61%, rising from 55% in the second half.fi2nd half

The first half of 2022 will see a 25% increase, followed by an additional 25% increase in the second half.fi

In the first half of 2020, Colliers predicts that hotel occupancy will exceed 65% by the end of 2023, fueled in part by increased holiday spending and a rise in meetings, incentives, conferences, and exhibitions (MICE) events.

The increase in foreign tourists is expected to boost hotel occupancy in the Philippines, encouraging developers to expand their presence in the leisure industry throughout the country.

In the fi

In the first six months of 2023, the average daily rates (ADRs) increased by 5.2%. ADRs for five-star hotels saw the highest growth, reflecting the comeback of business travelers and face-to-face MICE events. Colliers maintains its prediction of a 6% ADR growth in 2023. However, we expect this growth to be moderated by the significant number of hotel rooms set to open in the latter half of 2023.

 

Joey Roi Bondoc holds the position of research director at Colliers Philippines.