PROPERTY OUTLOOK. Santos Knight Frank's (SKF) outlook for the Philippine property sector remains rosy under the Marcos administration. From top to bottom, left to right are SKF chairman and chief executive officer Rick Santos, associate director and head of residential services Marievie Gimena, and senior director for occupier services Morgan McGilvray during the virtual media briefing on Thursday (Feb. 16, 2023). (Photo courtesy of SKF)
MANILA – Real estate services firm Santos Knight Frank (SKF) is optimistic about the outlook for the Philippine property sector this year, driven by the hospitality and retail sectors.
In a virtual briefing Thursday, SKF chairman and chief executive officer Rick Santos said retails and hotels are the fastest-recovering property sectors in the country amid the easing of coronavirus disease 2019 (Covid-19) restrictions and the increased mobility.
“Brick-and-mortar retail and hotels were some of the most severely affected real estate sectors during the pandemic. Now that travel and mobility restrictions have been lifted, we are seeing the resurgence and ‘unfreezing’ not just of market activity but also development and expansion of players in these sectors,” he said.
Santos said the hospitality property sector will continue to recover this year with the return of international flights and China’s relaxing of its Covid-19 policy.
“So we’re seeing revenge travel,” he added.
The Department of Tourism aims to lure 4.8 million international visitors this year, with Chinese tourists among the agency’s priorities.
In 2019, there were more than 1.78 million arrivals here from China. These Chinese tourists spent more than USD2.3 billion in the Philippines for their vacation here.
Last year, the Philippines received over 2.65 million tourists, still far from the pre-Covid tourist arrival of more than 8.26 million.
To supply accommodation to the potential international visitors this year, Santos said there will be 2,692 new hotel rooms that will be launched in Metro Manila alone between 2023 and 2024.
He said the return of the face-to-face events will also bolster the sector this year.
This can be seen in the inflation data, wherein restaurants and accommodation services sector is one of the top contributors to inflation in January 2023, he added.
Moreover, Santos said the policy of the Marcos administration not to implement any lockdowns amid the pandemic and to continue the opening up of the economy boosted the confidence in the retail industry.
SKF senior director for occupier services Morgan McGilvray said occupancy rate of retail spaces in Metro Manila at end 2022 reached 93 percent, which is nearing the pre-pandemic level of 96 percent.
A total of 4.5 million square meters (sqm) of retail areas were occupied in 2022, he said.
Meanwhile, McGilvray said the outlook for the office property sector remains rosy this year, with information technology and business process management (IT-BPM) industry driving demand in office space.
He said the high inflation in the United States and other parts of the world is a “welcome development” for the Philippine IT-BPM industry, as US firms are looking into cost-cutting strategies, which will involve putting up back offices outside the US.
McGilvray said the Philippines remains a top destination for IT-BPM investments.
“We expect more leasing activity this year as a result of greater outsourcing requirements from developed economies, the availability of quality office space and companies adjusting their work setups. While we will continue to see some downsizing of footprints for Philippine headquarter companies, we still expect to see an overall net positive take up in 2023 driven mainly by the BPO sector,” he added. (PNA)
