Office demand could reach up to 500,00 square meters by the end of the year, still low compared with 1.7 million sq.m. in 2019, as the lockdowns halted the momentum of the property sector’s recovery, according to Leechiu Property Consultants.
“While the recovery has not been as fast as earlier predicted, the worst appears to be behind us. We also note that government reforms have buoyed the industry,” David Leechiu, the company’s CEO, said.
Office demand in January to September was still led by the business process outsourcing sector at 383,000 square meters, or 98 percent of full-year demand in 2020.
The BPO sector will remain a catalyst of growth for the office sector and accounts for 129,000 square meters of the live requirements likely to be closed in six months, he said.
To date, the BPO’s take-up represents 44 percent of the demand or 169,000 square meters, and about a quarter of this figure, or 94,000 sq.m., have been in provincial locations.
Iloilo took up 37,000 square meters of that number, outpacing the combined demand year-to-date of Clark, Laguna and Davao, Leechiu said.
Metro Manila, however, should have enough office space for new entrants since these companies wanted to start their business in the country’s main cities instead of the provincial centers, the property consultant said.
Many of the developers, however, have delayed their projects due to the pandemic as the government kept on implementing hard lockdowns that curb mobility.
Compared to previous quarters this year, demand for the third quarter slowed due to mobility issues brought about by the rising cases and strict lockdowns of previous months, Leechui said.
This has been offset by 228,000 square meters of active office leasing requirements seeking to be completed within the next six months, he said.
He said the passage of Republic Act 11590 or the POGO Law, which clarifies taxation for Philippine offshore gaming operators, seemed to have halted their exodus.
“With travel restrictions easing up, we anticipate POGOs to start reopening their offices and begin to grow by the second quarter of 2022,” he said.
The current vacancy rate across Metro Manila is at 17 percent, with Bonifacio Global City in Taguig and Filinvest in Alabang enjoying low vacancy numbers and rents are expected to hold. Meanwhile, vacancy numbers in Ortigas, Quezon City and the Bay Area continue to increase, as rents decline.
Capital values in the major central business districts of Metro Manila continue to strengthen with accommodation values peaking at P113,000 per square meter in BGC.
Arca South’s closing prices reached a record P51,000 per square meter. Only the Bay Area saw a decline in property values resulting from POGO vacancies but these are starting to rally again.
“We may seem light years away from the pre-Covid era which saw the office market double and triple over just a few years. But markets continue to grow supported by strong fundamentals,” Leechiu said.