To capture pent-up demand, developers should be more strategic with their landbanking.
Developers should remain agile and mindful of the economy’s recovery prospects beyond COVID-19. To capture pent-up demand for offices, residential units, retail spaces, and industrial parks and facilities beyond 2022, they should be more strategic with their landbanking initiatives and maximize the delivery of infrastructure projects over the next 12 to 24 months.
As they do so, stakeholders should also watch out for rising interest rates; implementation of infrastructure developments; decentralization beyond Metro Manila; as well as the approval and implementation of policies improving the business climate.
Office: Tenants firm up back-to-office strategies
Colliers saw office deals in 2021 reaching 422,400 sqm, up 18 percent from the 357,400 sqm recorded in 2020. Traditional occupiers continue to lead office space absorption followed by outsourcing firms. Most of these companies took up spaces in the central business districts of Ortigas, Makati and Fort Bonifacio.
Traditional occupiers continue to lead office space absorption in Fort Bonifacio, Makati and Ortigas.
Several tenants are already firming up their back-to-office plans and these should sustain take-up over the next 12 months.
In 2022, we expect traditional and outsourcing occupiers to lead absorption in the capital region. Outside Metro Manila, we project a sustained demand in Cebu, Pampanga and Iloilo.
Residential: Shift to horizontal
Colliers recorded the completion of 8,731 units in 2021, up 159 percent from the 3,370 units delivered in 2020. The new units are located in the Bay Area and Fort Bonifacio. Colliers expects the delivery of 6,500 units per year from 2022 to 2026, with the Bay Area likely accounting for 47 percent of new supply during the period.
Colliers also saw a sustained take-up for house-and-lot, and lot only projects in areas outside the capital region in 2021. Among the popular locations were key urban areas in northern and southern Luzon including Pampanga, Tarlac, Bulacan, Cavite, Laguna and Batangas where residential projects are between 86 percent and 97 percent sold as of end 2021.
Colliers believes that a steady inflow of remittances from Filipinos working abroad should help sustain take-up for these horizontal projects beyond 2022.
Colliers saw sustained take-up for house-and-lot, and lot only projects in areas outside the capital region in 2021.
Retail to rebound
Data from the Philippine Statistics Authority showed that household spending grew by 4.2 percent in 2021 after a 7.9 percent contraction in 2020.
In our view, the easing of mobility restrictions and accelerated inoculation program should inject a much-needed boost to the retail sector. The Department of Health has announced that the Philippines is now back to low-risk status for COVID-19 which, Colliers believes, is a positive development for mall operators, retailers and consumers.
Retail rents are meanwhile likely to rise by 1 percent starting 2022, on the back of an improving economy and sustained purchasing power of consumers. This should partly improve retail space take-up.
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