The Philippine residential real estate market is languishing due to COVID, but a modest recovery may already be underway, and vaccination will be a “game-changer.”

That comes from a new report jointly released by real estate tech group Juwai IQI and its local agent team at IQI Philippines.

The pandemic-related restrictions and behavioural changes have reduced Philippine consumer and worker mobility by 45% compared to pre-pandemic levels. 

COVID Will Persist but Vaccines to Permit Reopening

New residential sales have fallen but not collapsed. Developers are proactive in offering discounts and incentives. These are successful at attracted buyers.

“The Philippines real estate market is struggling against several negative factors,” said Juwai IQI Group Co-Founder and Executive Chairman Georg Chmiel. “Nonetheless, we believe there will be a weak recovery in the second half of 2021 and that this rally will gather pace in 2022.

“Like the rest of Asia, effective and widespread vaccination will be the game-changer in the Philippines. Vaccination will bring back tourists and foreign investors and permit the resumption of domestic economic activity. 

“We know now that Covid will persist in one form or another, but with a sufficient vaccination campaign, the Philippines can attain herd immunity and reopen for commerce. 

“In the meantime, the government may consider targeted vaccination efforts. Thailand is exploring this in Phuket and Chiang Mai. Their goal is to vaccinate the residents of these locations so they can fully re-open to tourism from vaccinated travellers.”

Road to Recovery?

The companies expect demand to sustain a weak recovery in the second half. Their report says moderate costs and relatively high yields of approximately 6% on residential property in Metro Manila are helping drive demand.

In the longer term, vaccination will be the game-changer for both Philippine real estate and GDP.

Unfortunately for the county, widespread vaccination doesn't look likely until at least next year. The Philippines had administered two vaccines per 100 people in May. That compares to five per 100 in Malaysia, 23 in China, and 51 in Singapore.

Targeted Vaccination a Possibility

Inbound tourism is vitally important to the economy and the real estate market. While still on the route to widespread vaccination, the government may consider targeted vaccination efforts such as the "sandbox" program underway in Thailand's resort location of Phuket.

Under this initiative, the government is striving to vaccinate all eligible adults in the selected area and then in July to open up to vaccinated overseas tourists from low-risk countries — without requiring quarantine. 

Such measures might allow tourism to recover at limited risk to both foreigners and locals. The Tourism Authority of Thailand expects around 129,000 visitors to arrive in Phuket between July and September this year.

Big Developers Post PHP65 Billion in Sales

Manila-based IQI Philippines Managing Director Emanuel Andrew Venturina believes residential demand in the capital region is weaker but persistent. 

“We are still serving demand from several buyer groups. Overseas Filipino workers, local middle-class families, millennials and high net-worth individuals are all active, although rates of activity are down compared to the levels of 2019. 

“Many buyers today smell the scent of a bargain and are attracted by developers’ incentives and flexible payment terms.

 “Housing demand is fueled by having to stay at home. When you spend most of your week at home, it is predictable that you might eagerly hunt for a housing upgrade.”

Venturina said the big developers have posted credible sales numbers. 

“This year to date, SMDC transacted new project sales of PHP50 billion. Alveo Land posted PHP12.4 billion of sales and Federal Land has closed PHP4.5 billion of new project sales.” 

Click here to view and download the report.

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