Philippine real estate stays afloat with an improved performance from the office property sector and the high demand for logistics in the second quarter of this year. Nonetheless, with the recent reimposition of enhanced community quarantine (ECQ) in NCR and possibly in nearby areas, cautious optimism must still be upheld.
During the media roundtable of global real estate consultancy firm JLL Philippines last 28 July, offshoring and outsourcing (O&O) firms remain as the main driver of office sector. Meanwhile, the spotlight on logistics and the industrial sector is still stark with the continued growth of e-commerce.
Uptick in office sector
Office sector remains subdued for the first part of the year with elevated vacancies and delayed construction schedules. The work-from-home option for business process outsourcing (BPO) firms also add to this decline after being the main real estate driver in recent years.
According to JLL, average quarterly lease volume in the office sector improved to 175,000 sqm. Expansions and new lettings likewise contributed to the surged leases in Cebu offices that rose to 64 percent.
Resiliency of O&O firms, especially those that serve healthcare, e-commerce, and financial services are the key drivers to this improved performance.
JLL Philippines’ head of research and consultancy Janlo delos Reyes said that more than the sustained demand for O&O, it is the continuous vaccine rollout that is boosting confidence of business owners and employers to expand.
Properties cradling logistics and industrial services are still at their peak with e-commerce and delivery services getting high demand.
“The volume of logistics and industrial transactions grew by 47 percent from Q4 2020, and we see about 100,000 sqm that may be transacted before the end of 2021.
Nonetheless, this growth spurt on the sector cannot fully take off easily due to limited supply of properties that can approach it because “existing logistics spaces are built-to-suit.”
While dwelling on the developments from a year of real estate drought seem admirable, the consultancy firm was also adamant in pushing for “cautious optimism” especially with retail and residential sectors still grappling with the pandemic pitfalls.
With new variants and expected lockdowns happening soon, delos Reyes maintained that the current developments in the market can still be shaken.
With cautious optimism in mind, delos Reyes said that more investors and developers are looking into the possibility of diversifying their portfolios, targeting more assets in the logistics and industrial sphere.