Commercial land values had significantly grown in major business nuclei in the Philippines before the pandemic hit the overall business environment undesirably. Major factors such as condominium and office rents and supply play a significant role in determining the movements in the commercial land values especially in primary business districts in the Philippines. For instance, office rents and residential condominium selling prices are estimated to contract by around 15% to 20% as market corrections due to the adverse effects of the pandemic. Metro Manila office overall vacancy is anticipated to increase to 5% to 10% by 2020 year-end while 10% to 15% for residential condominiums depending on the health and fiscal initiatives to counter the pandemic. Similarly, upcoming residential condominium and office supply may even drop by as high as 20% considering the protracted economic and financial burden on businesses, developers, and operators.
In 2018 to 2019, Makati City Central Business District (CBD), Bonifacio Global City and Bay Area CBD stand the most active and most valued commercial havens with 50% to 90% year-on-year increase in commercial land values. This is primarily driven by the surge of demand from offshore accounts taking up most of the newly built prime office buildings and residential condominiums in those areas. Uncertainties are still present in the residential and office sectors given the pandemic and the so-called new normal in the property sector and commercial land values are seen to adjust accordingly. Initial data estimates show a 5% to 10% decline in commercial land values in Metro Manila by the end of 2020. Several drivers such as overseas Filipino workers’ remittances, tourist arrivals and offshore gaming operations have also been put to a test by the recent crisis which may have a significant effect on the demand for commercial lands.
Despite these, in a survey conducted to nearly 500 real estate practitioners, almost 60% expressed their likelihood to acquire properties in the Philippines within 2020 portraying the positive resiliency of investors amidst the crisis. More than 70% even perceived less than 10% decline in prices in commercial lots during the first month of the community quarantine. With regards to the location of preference, almost 45% of the respondents said that Visayas and Mindanao are among their top priority list for expansion and acquisition while almost 70% of those who chose Metro Manila remain bullish on acquiring properties in the region within 2020.
While most businesses find it challenging to navigate through this crisis, it is highly imperative for growth-driven practitioners to keep an eye on opportunities that may arise most especially in these trying times. Access to complete information, forecasts and insights may provide a defining edge in this highly competitive market. PRIME Philippines, the fastest growing real estate consultancy firm in the Philippines, remains committed to delivering up-to-date market data and analyses to help businesses steer their ventures towards a successful rebound from this crisis.