There is no doubt that COVID-19 has had a great impact on economies worldwide, forcing a halt in productivity for quarantine reasons for a long enough period of time that it has created negative effects on businesses, large and small. In the Philippines, businesses that have survived bankruptcy are still trying to recover from this impact. There have, however, been measures taken by industries for a slow recovery into 2021. Below, we show some statistics on both the decline and improvements in conditions in the real estate market during the pandemic period.
Office rental rates have definitely had to decrease, in order to offset the increase in office space availability, but this is seen to be a temporary issue, as the real estate industry holds a positive forecast of recovery toward the next year, post-COVID. That said, in the construction sector, the Philippine government has even started to approve the resumption of major projects for infrastructure competitiveness, to attract tourism and new investments. And despite the setback in productivity that the long quarantine period has brought, completion of the supply of offices will continue, even into 2021. As of the last quarter of 2020, there has already been an upward demand for office space, with the economy slowly getting back into gear for the New Normal.
To give a more comprehensive report on the status of Philippine real estate in 2020, here are a few statistics so far from a Manila Standard article:
- During the 1st quarter of 2020, office supply availability was at 556,686.86 SQM. By the 2nd quarter, supply was down to 378,152.24 SQM
- Office vacancy was at 4.6% in the 1st quarter, and increased to 5% by the 2nd quarter. Compared to 2019, however, which had 7.31% vacancy for the year in total, 2020 has only met 5% vacancy.
Given these statistics, it can be said that although office supply and vacancy have been negatively affected by the pandemic, the effect has been rather minimal compared to the previously gloomy forecast, and it has still fared rather well overall, to be able to expect a sure recovery when full productivity resumes.
Major drivers for the demand for office space have been: the gaming industry, with 36% share in leased space; the BPO industry, making up 30% of the share; and other industries, making up 34%. The gaming industry at this point is quite undecided on its future decisions in office leasing, due to restrictions being imposed by the Philippines and China for pandemic reasons. But this is not the case for BPOs, and the Philippines is expecting more office space occupation from this particular industry.
The BPO industry still continues to recognize the Philippines as one of the most preferred office locations, with the country ranking 1st in voice BPO, and 2nd in non-voice. Furthermore, according to Tholons Globalization Index 2019, Philippines is one of the Top 50 Digital Nations, with Manila (#2), Cebu (#12), and Davao (#95) finding a place in the 100 Super Cities. To increase the country’s economic standing, 25 new destinations are being made into ICT hubs to draw in investments for more jobs and other economic opportunities outside Metro Manila.
In the last years, there has as well been a growing demand for flexible and instant offices, also known as serviced offices. The growth in demand for these has not been deterred by the pandemic situation, due to the many advantages they pose for an ever-growing digital industry in the Philippines. Some of the advantages of serviced offices over traditional office spaces are:
- Serviced offices are often situated in prime locations and competitive areas
- They provide flexible leasing terms
- They offer crowd support services
- They are aligned with the constantly changing technological environment
- They offer pay-as-you-use facilities
Particularly in the IT-BPO industry, serviced offices have found a growing demand for their convenience, flexibility and ability to keep up with modern business demands. Offering high-quality serviced offices is one specialization of Ezy Outsourcing Hub. We have offices in the best business districts, in the most prime locations around Metro Manila. We can help you make the search easier, with a stress-free startup process so you can start operations right away. Give us a call today.
Overall, the Philippine real estate industry is looking up, despite the negative impact that COVID-19 has presented to the economy earlier in the year. In fact, the industry, like many others, is eager for the quickest possible recovery from the pandemic. Business will continue as usual in the New Normal.