Property slowdown seen temporary amid corruption probe — Leechiu

THE CORRUPTION probe involving government officials and contractors is expected to cause only a brief slowdown in high-value property transactions, with overall demand remaining steady, according to property consultancy firm Leechiu Property Consultants (LPC).

“There might be a pullback on transaction volume, but I don’t think prices are going to fall,” LPC Chief Executive Officer David Leechiu told reporters at the company’s third-quarter market briefing on Monday.

Mr. Leechiu said the impact of the corruption scandal will likely be concentrated in large or politically linked deals.

“The business community is largely skeptical that anything meaningful, significant, and honest will happen from all this coverage,” he said.

“So, they are just putting things on standby, thinking that maybe certain people will sell at a distressed level.”

He added that once investigations fade from public focus, “it will return to business as usual.”

Mr. Leechiu warned, however, that investors should be cautious when dealing with politically exposed or high-profile sellers, as such assets could be subject to freezing orders during investigations.

“So, what the government will do is freeze the asset of the seller — the person who’s convicted — plus the accounts of the other person who bought while they’re investigating,” he said.

LPC noted that while market sentiment has softened, the Philippine property sector continues to show resilience, supported by robust office demand and stable residential absorption rates.

In the office segment, demand reached 253,000 square meters (sq.m.) in the third quarter, up 17.67% year on year.

“We’re only at the third quarter, but we’re already close to hitting one million sq.m. of space, or 88% of last year’s demand,” Edward Gador, associate director for commercial leasing at LPC, said during the briefing.

Traditional offices accounted for the bulk of activity at 449,000 sq.m., followed by the information technology-business process management sector (436,000 sq.m.), government tenants (44,000 sq.m.), and Philippine inland gaming operators (37,000 sq.m.).

Vacancy in Metro Manila stood at 18% in the July–September period, with Bonifacio Global City and Makati central business district recording the lowest vacancies at 9% and 10%, respectively.

In the residential market, unsold condominium units in Metro Manila dropped to 79,400 in the third quarter, from 82,000 in the previous quarter. Demand rose 16% quarter on quarter to 7,713 units.

Mr. Leechiu said the bigger risk to the sector is capital flight, as some investors may choose to move funds overseas amid uncertainty. “The billionaires that could have been created here are being created elsewhere,” he said. — Beatriz Marie D. Cruz