The Philippines’ GDP grew 6.8% in the first quarter of 2018, as financial institutions maintained a positive economic outlook for the year on the back of the government’s infrastructure plans.

Sectors at a glance

• The Office sector remains afloat due to a diversified tenant mix; offshore gaming firms from China and outsourcing companies continue to occupy space in Metro Manila while traditional firms including government agencies continue to take up new space in emerging business districts. 
• Residential leasing in Metro Manila is being driven by Chinese employees and tourists. We see opportunities in workers’ dormitories in key business hubs in major business districts and affordable house and lot developments in urban areas outside of the country’s capital.
• In Retail, brick-and-mortar malls continue to attract more customers by providing lifestyle amenities. We see physical stores and e-commerce platforms complementing each other over the medium term. 
• Hotel occupancies and room rates continue to benefit from the influx of foreign travellers though we see occupancies and rates declining marginally in the next 12 to 18 months given the substantial new supply.

Not surprisingly, the real estate sector has continued its strong performance, with diversified tenancy driving demand in the office sector and residential sales mirroring last year’s record sales in the primary market. 

Colliers International Philippines Research Manager, Mr Joey Roi Bondoc told WILLIAMS MEDIA "The Philippines is becoming a key real estate investment destination in Asia."

"Gross yields for property investments in the country are among the most attractive in the region as they are propelled by a robust macroeconomic backdrop," he said. 

This encourages foreign companies, particularly Japanese, to be more aggressive in partnering with local firms for various residential and retail projects, Bondoc explains. "Over the near to medium term we see the entry of more international developers given the Philippines' rising status as a real estate investment hub in the region."

"This should result in a more competitive real estate market in the Philippines moving forward," he added.

Office leasing transaction volumes recorded for the first half of 2018 have already reached over 700,000 sqm, representing at least 80% of total 2017 transactions. Knowledge process outsourcers have driven demand, with the likes of Google, Amazon, and Paypal closing significant deals. Offshore gaming companies also continue to take up space both within and outside Metro Manila.

Residential sales in the primary market remain robust as take-up for H1 2018 is expected to breach 25,000 units, on par with last year’s record levels. Meanwhile, in the secondary market, vacancy rates declined for the second consecutive quarter. Colliers attribute both trends to growing demand from Chinese nationals relocating to the country.

Colliers expect strong showings from the office and residential sectors throughout 2018 as demand potentially reaches record highs yet again. That said the market is expected to remain competitive, with an additional 900,000 sqm of office space to be completed and 12,000 residential condominium units to be delivered within the year in Metro Manila business districts.

Colliers Philippines is seeing sustained growth in the property market. "The gains are trickling down to key real estate sectors such as office, residential, hotel, industrial and retail. We are seeing challenges ahead but we believe that developers can maximize opportunities with a conducive business environment."

Click here to view the Colliers International Asia Market Snapshot Q2 2018 report.

For more information or to enquire about the report, phone or email Ieyo Deguzman, Deputy Managing Director of Colliers International Philippines via the contact details listed below.

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