While the property sector remains robust so far, acute shortage of skilled workers, tax reform jitters and risks of infrastructure spending delays may curb the growth of this sector moving forward, property consulting firm Colliers Philippines said.“Overall, we see the Philippine economy’s upward growth trajectory being sustained by massive public infrastructure spending. The government spending-backed economic growth should further stoke the property sector,” Collier said in a research note issued on Monday.But Colliers sees a number of headwinds that might constrict the property segment’s growth moving forward. The acute shortage of skilled construction workers, for instance, was seen to threaten the launch of more residential projects in Metro Manila.
Colliers added that there were lingering concerns on the final version of the Comprehensive Tax Reform Program to be approved by Congress.
“The delays in the approval of the measure that proposes to reduce corporate income tax rates and rationalize tax incentives granted to foreign investors has been compelling occupants to take a wait-and-see stance,” the research note said.
Another key risk is the government’s inability to fully spend its infrastructure budget, which is likely to result in delayed construction of vital public projects that provide direction to property developers’ expansion strategies.
“Colliers believes that over the next 12 months, developers should continue to adapt to the evolving preferences of investors and tenants to survive in a fiercely competitive Philippine property market,” it said. “In our opinion, property firms should actively engage in discussion with the government and other stakeholders regarding policies and programs that are likely to further redefine the Philippine property landscape.”
Colliers observed key adjustments in the strategies of property players in the past 12 months, including the development of more co-living projects as developers and commuters adjust to the worsening traffic in Metro Manila.
The property consulting firm also reported the ramped-up launch of mid-income condominium units on the fringes of major business districts as property developers strive to cash in on investors’ preference.
Likewise noted was a trend of aggressive landbanking and office construction outside the capital region as developers follow the government’s infrastructure plan and identify alternative expansion sites for occupants, including offshore gaming and outsourcing firms, amid the government’s economic zone moratorium in Metro Manila and pending approval of a tax reform bill that purges tax perks to investors.
Colliers also noted that more commercial property developers were warming up to nontraditional mall tenants such as flexible workspace operators to avert the threat of increasing vacancy and sustain foot traffic.
“In our opinion, developers should continuously look for opportunities to capture demand from foreign retailers in light of the lower capital requirements for foreign retailers and capitalize on opportunities for transit-oriented development in urban areas outside Metro Manila, following the infrastructure development of the national government,” Colliers said. INQ