THE recovery of the Philippines’ real estate sector will be delayed because of aggressive interest rate hikes and economic uncertainties, said a global real estate services firm.
In its December property market report, Cushman and Wakefield Phils., Inc. predicts the sector to not post full recovery in the short- to medium-term as economic uncertainties still weigh on a global scale.
However, it expects the sector to move through these headwinds as it banks on long-term growth prospects, which it sees to be relatively bright compared with the Philippines’ neighboring countries.
For the office segment, Cushman and Wakefield said that it expects the flexible work setup to be sustained in 2023 as the arrangement is seen to help employee retention and development.
The Fiscal Incentives Registration Board extended the validity of Resolution No. 026-22, which allows registered business enterprises in the information technology-business process management (IT-BPM) sector to adopt work-from-home arrangements.
With the extension, 30% of the IT-BPM sector’s total workforce can now adopt a flexible working setup until the end of January 2023, without adverse effects on their tax incentives.
Meanwhile, the real estate services firm sees unfavorable economic conditions to weigh heavily on the growth of demand for mid-end housing projects.
Despite this, the demand for residential condominiums in Metro Manila is seen as sustainable despite the rise in commodity prices and interest rates.
According to Cushman and Wakefield, the resiliency of the high-end segment is due to the return to the office scenario and of business operations.
On the other hand, the firm expects strong domestic tourism in 2023, which is seen to boost occupancy rates in hotel and accommodation establishments.
Cushman and Wakefield said the travel and tourism industry is “on a strong course of growth and is expected to deliver a much better performance this year amidst the anticipated lifting of flight bans from various countries.”
The industrial and logistics property segment is seen to benefit from the demand from e-commerce companies and the resurgence of the manufacturing and trade industries.
“Long-term investment targets in the industrial property segment present a strong case given the explosive growth of the country’s digital economy,” it added.
Meanwhile, the firm expects stronger performance from the retail segment this year as foot traffic reverts to pre-pandemic levels.
“With ecommerce continuing to gain prominence, retail brands will continue to benefit from the integration of physical and virtual elements,” it said.
In 2023, Cushman and Wakefield expects the services sector to lead the country’s economic growth.
“The services sector can further leverage digital technology advancement as many of the current transactions no longer require face-to-face presence, whilst improvement in the country’s internet infrastructure is deemed necessary to realize its full potential,” it said. — Justine Irish D. Tabile