Philippine property market outlook in 2021 (2021年菲律賓房地產市場狀況)

Date: Feb 23, 2021

Philippine property market outlook in 2021

The COVID-19 pandemic has hit the Philippines hard, putting an end to years of strong economic growth. The country’s GDP fell by 10 percent with the local economy contracting by 8.5 to 9.5 percent. 

The Development Budget Coordination Committee is still predicting a GDP growth of 6.5 to 7.5 percent this year as the country puts COVID-19 behind it specially with the arrival of the vaccines.

There is hope for the Philippine property market to recover. After years of soaring prices, strong demand and great performances, property experts believe that this could be the much-needed correction for the real estate sector. 

With that being said, there are still a number of uncertainties surrounding the Philippine property market that we would need to address.

Key concerns facing the Philippine property market

1) Can the market re-establish its momentum?

After years of strong demand, rising prices and never-ending activities, the Philippine property market momentum has finally came to an end.
Bangko Sentral ng Pilipinas (BSP) reported that home prices fell in the country by 14.1 percent in the third quarter of last year and were down 0.4 percent year-on-year.

Of course, that doesn’t tell us the complete story. The fact is that:
Firstly, Philippine home prices increased by 27.1 percent during the second quarter of 2020, a record breaking performance that stunned many analysts.
Secondly, condominium prices were noticeably down in the third quarter, but townhouse and detached/attached housing prices both rose.

Property sales fell across the board and that is likely to be the case for this early 2021. Yet, some developers are optimistic that the right projects, the ones designed with the “New Normal” in mind, will still attract new buyers.
Additionally, there is  hope that a swift economic recovery would see the property sector quickly return to its pre-COVID-19 levels.

2) What will be the legacy of COVID-19?

Philippine property market
With more people and businesses migrating out of the city, the Philippine property market will have to adjust

Working from home under the “New Normal” is going to stay. Ultimately, the legacy of COVID-19 will be felt across the residential, office and retail real estate sectors. This transformation has already begun in some areas.

The country’s largest retail developers, like SMDC and Ayala Land, have already repurposed their mall spaces into storage and e-commerce facilities. While other companies are moving away from the traditional office towers in central areas to townships in suburban locations where employees can enjoy greater convenience in a healthy environment and specially with the shortage of mass transportation.

Consumer preferences are already shifting in the residential sector, and this will continue within 2021 and beyond. Some developers have started focusing entirely on sustainable living, launching projects that provides a wide range of wellbeing amenities.

Living within integrated communities that mix residential areas with office, retail and recreational components are also expected to grow in popularity over the next 12 months.

“The ideal cities in the future will need to offer opportunities for innovations that enhance the quality of living (right balance of sustainable and cosmopolitan lifestyle); working (uncongested spaces and presence of job opportunities); playing (availability of recreational and cultural centers), and learning (talent enhancement and R&D centers),” Claro dG. Cordero, Jr., Cushman & Wakefield Director and Head of Research, told BusinessWorld.

3) What's the trend on OFW remittances?

Overseas Filipino worker (OFW) remittances are key to the Philippine property market and economy in general. It is estimated that 370,000 OFWs had returned home in 2020 with another 80,000 expected to come back during the first half of this year.
In the short term, remittances picked up towards the end of 2020 and the House of Representatives passed a measure providing discounts on remittance fees for OFWs sending money to their families.

Looking long term, a successful global rollout of the COVID-19 vaccine and the loosening of travel restrictions during the year may allow OFWs to return to their jobs.
This would again increase the remittances with the Philippine property market to mostly benefit from it.

However, flat or declining remittances would mean bad news for the Philippine property market because the OFWs are the key source of potential homebuyers. 

It’s still too early to tell, but this would be something that the real estate sector will be watching closely.