By Denise A. Valdez
THE current enhanced community quarantine in Luzon and other select areas across the country is pushing the real estate sector to accelerate the digitalization of operations.
In a recent report by property services firm JLL Philippines, it said real estate players will have to adapt faster to the market’s changing demand as the quarantine poses new needs from emerging work environments.
“There could be greater impetus and increased urgency for real estate players to accelerate their digitization efforts and incorporate technology in their existing and future workflows,” it said.
“Many real estate firms have leveraged on technology and online platforms to keep their business afloat and remain connected to employees and clients during this period. These companies may be inclined to incorporate applications that prove helpful during the outbreak in their operations and may be more open to embrace new ones moving forward,” it added.
JLL noted the real estate sector — across industries — has recorded declines in the past weeks due to the coronavirus disease 2019 (COVID-19) pandemic.
Since the implementation of an enhanced community quarantine in Luzon mid-March, demand for office space in Metro Manila has slumped, particularly from the online gaming and information technology-business process management (IT-BPM) sectors.
The residential segment likewise saw clients pulling out of their spaces, proven by the reopening of condominium units in different residential projects. JLL said this resulted in an increased use of online platforms to seal new transactions, and in worse cases, developers planning to postpone project launches.
The retail segment is also challenged by the situation, not just by the lack of foot traffic in malls, but also by rent condonation for tenants. Shopping activity has now shifted to online stores that are using social media to support their businesses.
The pandemic also forced some players in the hospitality segment to temporarily close because of massive drops in bookings from the tourism market. JLL said occupancy levels for hotels in Metro Manila are now declining to around 20-30% so far.
The industrial segment is not immune from the pandemic either, as the disruption in the supply chain due to travel restrictions has resulted in reduced capacity of 50% or lower for some contract logistics providers.
As the landscape changes, JLL said it is important for the real estate sector to adapt to the shift in customer activity to online and study how to grow in the new environment.
“Developers and property managers may bolster their existing applications and virtual functionality by introducing new and/or expanding the roster of processes and systems migrated online… Similarly, retail players may continue to strengthen their omni-channels and increase their in-house capability and/or expand their logistics network,” it said.
The work-from-home scheme currently implemented by most companies, as forced by the lockdown, also pushes the real estate sector to evaluate how to remain relevant when the setup becomes more widely accepted.
“There may be increased reception towards adopting flexible work arrangements and explore alternative workplace strategies that may influence future space requirements and design… [T]hose that found effective setups may be more open to employ similar schemes that may affect their physical space moving forward,” JLL said.
The firm also expects there would be increased attention to health and wellness as part of real estate design, as buyers would be more conscious of these concerns due to the virus outbreak. “Building owners and property managers may also revisit their building ventilation designs and air filtration systems, as well as consider the application of new cleaning technologies to enhance health and safety measures within their buildings,” it said.
The crisis may also give birth to new opportunities for real estate in Visayas and Mindanao, as JLL said companies may consider setting up sites outside Luzon as part of their business continuity plans. It noted recent calamities and the current quarantine are all in the Luzon region, which might make Visayas and Mindanao more attractive from here forward.
“This may translate to increased demand for both traditional office and flexible workspaces in established and growing markets such as Cebu, Davao, Iloilo, Bacolod, and Cagayan de Oro City, among others” it said.