Property demand climbs in Q1

Property demand climbed in the first three months of 2021 versus the previous quarters with the need for office space up double digits, data released by Leechiu Property Consultants (LPC) on Monday showed.

LPC reported demand for office space at 109,000 square meters in the first quarter, up 22% from the 89,000 square meters registered in the fourth quarter of 2020. The biggest share was accounted for by the information technology-business process management (IT-BPM) sector with 33,000 square meters or 30%.

This was followed by e-commerce with 19,000 square meters or 17%; banking and finance with 11,000 square meters or 10%; services with 7,000 square meters or 6%; FMCG with 5,000 square meters or 5%; logistics with 3,000 square meters or 3%, real estate and co-working with 2,000 square meters each or 2%, and others with 27,000 square meters or 25%.

"Despite the hardships the retail industry has experienced we are seeing companies adapt, innovate, and commit to space in anticipation of a recovery," Associate Director Mikko Baranda said in a virtual briefing.

POGOs down

The same data showed that while there have not been any transactions for the Philippine Offshore Gaming (POGOs) in the past quarters, the industry has started to show interest in the market with 31,000 square meters worth of expansion.

POGOs vacated a total of 396,000 square meters from the second quarter of 2020 to the first quarter of 2021 out of the 1.7 million-square meter total footprint of POGO.

Out of the vacancies, 210,000 square meters were accredited by the Philippine Economic Zone Authority (PEZA), and can possibly be absorbed by the IT-BPM market.

"Many of the POGOs pre-terminated their leases. That's because most of them have only been around for the last two years," said LPC Chief Executive Officer David Leechiu, noting that almost all of the nearly 400,000 square meters vacated were pre-terminations.

"Renewals are not expected until 2023 but 80% of the industry is still here. Things could be much worse but they are not. I'm quite optimistic that both sides, the government and the POGO sector, will find a middle ground to compromise and that will be exciting," he added.

Residential

Demand for residential space picked up 5.7% in terms of unit sales in the first quarter from the fourth quarter of 2020.

The interest for premium units remains, starting at P4 million and above, and continuously increasing. However, limited inventory and lack of access to funding have slowed down sales demand of lower and middle income.

"Rental rates softening is seen as temporary and expected to stabilize once quarantine restrictions ease, vaccine rollout speeds up, and office operations go back," LPC Associate Director Tam Angel said in his presentation.

Investors are also taking advantage of promotional payment terms in anticipation of market recovery events, causing demand to pick up for the second quarter in a row.

Moving forward, Leechiu believes investor sentiments will improve across all sectors once a significant size of the population is vaccinated against the coronavirus disease 2019 towards the fourth quarter of 2021.

Other drivers of the optimism are the decline in interest rates, the effectiveness of the quarantine measures, the implementation of the CREATE Act, and the benefits of the infrastructure projects.—AOL, GMA News