CONTACT US
Share: Share on Facebook Share on Twitter Share on LinkedIn I recommend visiting cushmanwakefield.com to read:%0A%0A {0} %0A%0A {1}

Property Developers Remain Less Optimistic of the Real Estate Market in the Next Six Months: Cushman & Wakefield Philippines Surveys Property Developers

Claro Cordero Jr. • 11/09/2020

But positive sentiment outweighs negative 

 

67 per cent of real estate developers are unsure of the country’s economic recovery path in the next 12 months, a survey by Cushman & Wakefield Philippines has shown. As the Philippines formally enters into the recession phase after registering a record contraction of 16.5 per cent and 0.7 per cent in Q2 2020 and Q1 2020, respectively, the continued disruption to business and economic activities weighed heavily on consumer spending – the biggest contributor to GDP – by shrinking 15.5 per cent in Q2 2020. 

Faced with the weighed-down consumer sentiment along with the anticipated decline in overseas Filipino (OF) remittances and tourism receipts – two of the most-hit sectors of the economy due to the severity of containment measures in response to the COVID-19 virus – amidst the burgeoning unemployment rate, it is imperative to take a look at the severity of its implications from the viewpoint of the Philippines’ real estate developers.

Key findings of the survey:

1) Less optimistic six-month outlook for property developers 

Real estate developers in the Philippines remain largely less optimistic as they expect capital values and rental rates to soften in the short-term. In the medium-term, developers express optimism that the property market will show early signs of recovery along with moderate growth in capital values and rental rates. Market vulnerability, however, is seen to persist up to the mid-term. In the long-term or a period of two to three years, the developers are very optimistic of the full recovery of the property market and expect that the market will again build-up momentum through a strong rebound of both supply and demand growth drivers. By then, the developers also expect a sharp recovery of capital values and rental rates. Property Developers Remain Less Optimistic of the Real Estate Market

2) Industrial and office sub-sectors remain resilient during the pandemic 

Real estate developers maintain a bright outlook towards the office and industrial sub-sectors. 44 per cent of the respondents expect the office sub-sector to recover the fastest, as demand for IT-BPM activities are expected to grow post-pandemic period. On the other hand, 55 per cent of the respondents have expressed no change in the project pipeline for industrial developments over the next 12 months. In terms of demand, 61 per cent expect that demand for industrial space in the next 12 months will not be far from its pre-COVID levels.

Property Developers Remain Less Optimistic of the Real Estate Market

3) Supply of new hotel and retail space to fall significantly in response to revenue losses

Property Developers Remain Less Optimistic of the Real Estate Market

Significant reduction in the supply of new hotel and retail space is expected as roughly half of the hotel and retail development pipelines over the next 12 months are indefinitely stalled by the pandemic. With the tourism industry on standstill and the uncertainties continue, 88 per cent of hotel developers and 53 per cent of retail developers expect revenue losses of greater than 50 per cent in the next 12 months. Following the more relaxed quarantine restrictions towards the end of Q2 2020, establishments other than the essential ones have been allowed to partially resume operations in shopping centers with strict implementation of security and sanitation measures. However, footfall remains far below pre-COVID levels with dampened consumer sentiment and weak household spending as consumers are holding back consumption amid the uncertainties that surround the pandemic. 

Claro Cordero Jr, Director, Research, Consulting & Advisory Services, Cushman & Wakefield Philippines said “Market vulnerability will persist in the mid-term. In the long-term or a period of two to three years, the developers are very optimistic of the full recovery of the property market and expect that the market will again build-up momentum through a strong rebound of both supply and demand growth drivers. By then, the developers also expect a sharp growth of capital values and rental rates. The fundamentals for the Philippine real estate market remain very strong”.

Download a copy of the COVID-19 Real Estate Developer Sentiment Survey here

 

 

 

With your permission we and our partners would like to use cookies in order to access and record information and process personal data, such as unique identifiers and standard information sent by a device to ensure our website performs as expected, to develop and improve our products, and for advertising and insight purposes.

Alternatively click on More Options and select your preferences before providing or refusing consent. Some processing of your personal data may not require your consent, but you have a right to object to such processing.

You can change your preferences at any time by returning to this site or clicking on Privacy & Cookies.
MORE OPTIONS
AGREE AND CLOSE
These cookies ensure that our website performs as expected,for example website traffic load is balanced across our servers to prevent our website from crashing during particularly high usage.
These cookies allow our website to remember choices you make (such as your user name, language or the region you are in) and provide enhanced features. These cookies do not gather any information about you that could be used for advertising or remember where you have been on the internet.
These cookies allow us to work with our marketing partners to understand which ads or links you have clicked on before arriving on our website or to help us make our advertising more relevant to you.
Agree All
Reject All
SAVE SETTINGS