SUSTAINED RECOVERY. The continued reopening of the economy is expected to bolster demand for office spaces next year. A study by a real estate brokerage company showed that indications for higher demand is already seen as early as December 2022 despite the hikes in interest rates. (PNA file photo)

MANILA – Officials of a real estate brokerage firm in the country is optimistic of the continued growth of domestic real state sector given the reopening of the economy and the private sector’s low debt level.

In a virtual briefing on Monday, Leechu Property Consultants (LPC) chief executive officer (CEO) David Leechiu said prices are rising amid the uptrend of interest rates but demand for office and residential spaces remained high.

Results of the firm’s middle of December 2022 study show that office demand so far this year reached 975,000 square meters (sqm), exceeding the combined demand in the past two years at 389,000 sqm in 2020 and 540,0000 sqm in 2021.

Bulk of the demand came from the information technology-business process management (IT-BPM) sector at 466,000 sqm given the hybrid work set-up.

With the return-to-work policy expected in 2023, the study indicated that resumption of 100 percent office work for the IT-BPM sector alone would require an office space demand of around 793,000 sqm.

The firm said a 210,000 sqm of live requirement from the IT-BPM sector is already visible to date.

In terms of the impact of the rising interest rate, LPC Director for Research and Consultancy Roy Golez said property developers are more affected than the customers because the latter are given longer payment terms to cushion the impact of the higher rates.

“It’s more on the developer side where we will be seeing a higher impact of these interest rates as logistics inflation and interest rates impact on the construction cost when delivery these products, especially when the prices would have been fixed today and the construction for a certain building will be over a period of four years, maybe even five years.” he said during the same briefing.

Leechiu further said the real estate sector remains robust despite several economic crisis in recent years and its impact on prices.

“That’s a testament to the high savings rate and the low debt levels in the private sector. And that’s why, despite all these ramping up of interest rates, it not really caused much havoc in the property sector as far as capital values are concerned,” he said.

He said many people who own properties “are strong handed.”

“And I think that this trend will continue,” he added. (PNA)