‘Emerging’ cities to help drive property market recovery

By Jenina P. Ibañez, Reporter

BUSINESS DISTRICTS outside the capital could help drive post-pandemic growth of the Philippine property market, analysts from real estate services firms said.

Opportunities during the coronavirus pandemic could be seen in the demand for outsourcing office space, high-end residences, and e-commerce warehouse space, Cushman & Wakefield Head of Research, Consulting and Advisory Services Claro Cordero, Jr. said at a BusinessWorld Insights webinar on Saturday.

Key government infrastructure projects, Mr. Cordero said, have led to some growth in areas outside Metro Manila’s financial hubs.

“We’ve seen the completion of these new infrastructure developments… they are all supportive of the growth of property values in areas outside of Makati and BGC (Bonifacio Global City). That also will enhance urban renewal in other areas that have low potential for development.”

Major developers have been putting in “a considerable amount of investment” in areas like Pampanga, Laguna, Cebu, and Davao, Mr. Cordero said.

Completed road projects have helped improve access to the north and south of Metro Manila, he added.

“But there’s still a lot of work to do, not just in the bridges and all those road networks. I think what is important also now — and as we take note of best practices from other global cities — public transport is one area which we think still needs a lot of thinking and a lot of focus from the government,” Mr. Cordero said.

“That will not only benefit the middle class and the upper income strata, but also more importantly, the workforce. And if you have a workforce that is fairly mobile from one point to another in the city, then you drive economic activity.”

OUTSOURCING GROWTH
The government and an outsourcing industry group last year identified 25 “digital cities” to focus on for promoting outsourcing development.

Leechiu Property Consultants Executive Director for Commercial Leasing Phillip Añonuevo in the same event spoke about the outsourcing sector’s office space demand last year as the country grappled with the pandemic.

In his presentation, he noted outsourcing firms took up office spaces in the provinces due to their availability in economic zones. Demand from outside the capital accounted for 43% of outsourcing take-up in the country for the first time last year.

Outsourcing revenue rose just 1.4% to $26.7 billion last year from the 2019 figure, the Information Technology and Business Process Association of the Philippines (IBPAP) said. To compare, the sector’s revenues jumped 7.1% in 2019, beating industry targets.

Morgan McGilvray, senior director of occupier services at Santos Knight Frank, said in a recent e-mailed response that growing demand in outsourcing is focused on remote work, with companies hesitating to lease additional office spaces until they are able to bring 100% of their workers back on site.

Mr. Añonuevo said that office take-up from outsourcing last year fell to less than 400,000 square meters from more than a million in 2019, as companies did not want to invest in new offices they would not have been able to use during the lockdown.

“When companies become confident in using their offices then I think it will go back to close to those 2019 levels,” he said.

Companies may start planning new investments towards the third quarter, Mr. Añonuevo said, noting that such plans would hinge on the COVID-19 vaccine rollout.