WE CONTINUE to experience challenging times, with a multitude of headwinds facing the world today.

Impacting the local markets and creating fear and uncertainty are: the current worldwide resurgence in coronavirus disease 2019 (COVID-19) cases due to the Omicron variant BA.5, the spread of the monkeypox virus, the global currency and debt crisis, the Chinese real estate mortgage boycott, supply chain problems, logistics difficulties and increasing costs of shipping, global inflation and increasing interest rates, and the food and security issues arising from the Ukraine-Russia war.

And yet, we believe that the Philippine economy might be well cushioned from all these negative global headwinds because of several factors in the country’s favor.

DAVID LEECHIU, CEO of Leechiu Property Consultants

Overseas Filipino Remittances remain steady, and in fact, are increasing. Remittances have historically increased during times of crisis. With the renewed demand for Philippine nurses and oilfield workers, we see sustained remittances. Overseas Filipinos’ remittances grew for the second month in a row in April 2022, up by 3.8%  to reach $2.67 billion and will likely by year-end 2022 be higher than 2021’s figure. This steady source of dollar earnings will continue to support Filipino families.

Outsourcing services, which include the business process outsourcing (BPO)industry, have seen higher demand as a result of rising inflation and cost pressures in Western countries. There has been continued growth in the Information Technology and Business Process Management (IT-BPM) sector, especially in the countryside.

The IT-BPM sector is the country’s largest employer, accounting for 1.4 million jobs. The IT & Business Process Association of the Philippines said 120,000 jobs were created in the IT-BPM sector in 2021 alone. This is the second highest annual number of jobs created since the inception of the BPO industry in the country.

Ongoing projects under the Build, Build, Build program will not be suspended, and thus government spending will proceed, President Ferdinand R. Marcos, Jr. said during his State of the Nation Address (SONA). The continuity of the infrastructure program will boost employment, while improved connectivity will boost productivity.

In Metro Manila alone, there will be 126.1 kilometers of roads, bridges, and railways to be completed from 2023 onwards. These developments will drive logistics and development growth throughout the Philippines while increasing property values and improving local government income.

Tourism will likely be the largest industry of the Philippines in 10 years, or by  2032. The opening of seven new airport projects at the end of 2021 added 16.7 million in annual passenger capacity. With projects in the pipeline, annual passenger capacity is expected to surge to 386 million passengers from the current 55 million.

Mr. Marcos’ statement that tourism continues to offer an abundance of opportunities has also boosted the confidence of industry investors and operators alike.

The Philippines is likely to benefit from tourism, given the current trend of foreign travelers seeking cheaper destinations amid rising global inflation.

Mr. Marcos’ declaration that the government would no longer impose lockdowns, which the economy could ill afford, is expected to have the widest impact.

Overall mall foot traffic is currently at 75% of pre-pandemic levels, while weekend mall traffic is now at 100%. The President’s assurance of no lockdowns, alongside the return of employees to offices, will likely bring back food and retail sales to pre-COVID levels.

The President’s unrivalled popularity gives him the political capital to push forward government projects. The stable transition from the Duterte administration to the Marcos government and the business-like approach of the latter bode well for the business community and the economy in general. The relatively stable and quiet political environment puts the Philippines in a better position to face the global economic uncertainties, and to encourage continued dollar inflows and improved consumption.

The office sector’s growth momentum is likely to speed up in the second half of the year with the implementation of the no-lockdown directive and a resolution to the work-from-home arrangements with the Philippine Economic Zone Authority.

Current live requirements for transactions in various stages of negotiation has been very encouraging and has so far been the highest since the start of the pandemic at 451,000 square meters (sq.m.) as of the second quarter of 2022. IT-BPMs accounted for 212,000 sq.m. of that total.

The government’s perceived determination to return to business as usual is expected to drive the Philippine office market back to 2016’s pre-POGO (Philippine Offshore Gaming Operators) and pre-pandemic state. Office demand in 2016 was then at 647,000 sq.m. making the Philippines one of the major office markets in the world. As of the second quarter of 2022, actual office absorption was 255,000 sq.m., the highest since the start of the pandemic.

For the residential condominium sector, the unhampered mobility and continuous operations will prompt higher activity levels. The take-up in the second quarter of 2022 was at 9,030 units or already 70% of pre-COVID levels, thanks to stretched downpayments for amortization and other concessions offered by developers.

Moreover, higher construction costs and market uncertainties will prompt developers to offer even better payment terms to buyers in an effort to reduce inventory levels and to pave the way for new launches. Investors and buyers would be wise to grab this opportunity to lock down the price today and to pay interest-free downpayment over a period of up to 4 to 5 years. They will be highly rewarded in the recovery a few years from now.

In his SONA, Mr. Marcos said he aimed to spend 5% of gross domestic product annually on improving roads and transportation systems in key cities, a continuation of the previous administration’s Build, Build, Build initiative. These infrastructure projects have increased accessibility from Metro Manila to Southern Mega Manila. Land values have consequently been rising in neighboring communities with residential lots in Cavite and Laguna increasing by 7%-15% annually. Continuation of these infrastructure projects will further prompt residential developers to launch more projects.

Investment strategies to keep up with rising inflation rates are key to mitigating diminishing buying power. Real estate has always been considered one of the safest assets for capital preservation in times of economic uncertainty. Amid the string of crises over the past decades, investments in residential lots in the high-end gated subdivisions in Metro Manila have proven to be excellent stores of value.

More attractively, investments in residential lots South of Metro Manila have exhibited unparalleled growth. For residential condominiums, capturing the price today will be beneficial when inflation and rising financing costs due to interest rate hikes push construction costs and thus selling prices upwards.


David Leechiu is the chief executive officer of Leechiu Property Consultants.