Philippines as a property investment hub

Prior to the pandemic, the Philippines was gradually being positioned as a key property investment destination in the region. As a result, we saw more foreign property firms partnering with local developers in building office, residential, retail, and even township projects.

In fact, at Colliers Philippines, we were busy presenting Philippine property market updates to foreign firms that were planning to either develop residential communities with local players or enter the country’s growing property segments including leisure, industrial, and retail.

In our view, the international partnerships will only make the property landscape in the Philippines more competitive. Overall, more local and foreign brands result in greater competition which should ultimately benefit Filipino investors and end users.

But due to the pandemic, we saw major investment decisions being paused. Due diligence screenings were either extended or cancelled and the country’s potential to become a major investment hub in Asia was curbed by COVID-19.

It is interesting to note that the country is finally recovering after major economic disruptions in 2020 and 2021. Colliers Philippines believes that there are several factors that will help the Philippines become an attractive investment destination in Asia Pacific over the near to medium term.

Massive infrastructure spending

Massive infrastructure spending, as committed by the current administration, should benefit the property sector in general.

The annual infrastructure allocation of 5 percent to 7 percent of the country’s annual gross domestic product (GDP), as recommended by the World Bank, should support the Philippine economy’s expansion postpandemic and buoy the local property market.

Colliers Philippines sees this ramped up spending on public projects supporting the continued development of satellite communities outside of Metro Manila. These integrated communities offer a better value proposition than standalone projects and are seen to be a more attractive option for investors. More business process outsourcing (BPO) tenants are likewise seen to gravitate toward integrated communities as they offer a better living and working environment.

With an improving economy and support from the government, Colliers sees the Philippines enticing more foreign players to develop more masterplanned communities in the country. We project more joint venture deals between major foreign developers and Philippine property firms moving forward.

Bright macroeconomic prospects

The Philippine economy posted its fastest pace of growth in more than 40 years in 2022.

This is a positive signal for the property market which, over the past decades, mirrored the boom-bust cycle of the country’s economic output. This economic expansion should support positive net take-up of office space in 2023 and continued rebound in Metro Manila’s pre-selling and secondary residential markets.

An aggressive stance taken by the national government in attracting manufacturing investments should result in greater absorption of industrial space across the country. The personal consumption-led economic growth should meanwhile spur retail and hotel demand.

To cash in on the sustained growth, developers should line up more projects in key growth areas outside of Metro Manila, including Pampanga, Bulacan, Tarlac, Cavite, Laguna, Cebu, Bacolod, Iloilo, Davao, and Cagayan de Oro.

Cashing in on recovery and what to expect moving forward

Macroeconomic prospects look bright for Philippine developers. Colliers Philippines believes that property firms, investors, and end users should be quick in reaping the low hanging fruits from the property segment’s rebound.

There’s no doubt that the Philippines remains on the radar of foreign property firms. The government should thus ensure that the Philippines remains attractive by implementing reforms such as improving business registration process, curbing corruption, continuing the infrastructure implementation, and upskilling the country’s workforce. Implementing these reforms is crucial in ensuring that the Philippines remains on the investment radar of foreign businessmen.

We should send a clear message that the Philippines, including its property sector, is open for business.

Overall, Colliers Philippines believes that foreign firms’ entry into the domestic market should result in a more dynamic and diversified property sector which should eventually benefit Filipino end users and investors. Opportunities abound and only the agile stakeholders will be able to capture the property sector’s gains. The Philippine property has finally turned a corner, and no one wants to be left behind.