Real estate opportunities after the pandemic: Why smart investors should act now (大流行後的房地產機會: 為什麼聰明的投資者現在應該採取行動)

Date: Mar 31, 2021

The Philippine economy is primed for an imminent recovery in 2021, offering unique opportunities for real estate investors whose needs have been reshaped by the pandemic. As the economy reopens and vaccination programs are rolled out, it is time for smart investors to seek for developments that can offer the highest potential to grow in value. 

This was the forecast of Sheila Lobien, Chief Executive Officer of the Lobien Realty Group, when she presented on “Philippine Real Estate Opportunities in the Post Pandemic World.”

Economic recovery

Lobien noted that while the Philippine economy may be sensitive to political, natural, and global financial risks, it is nonetheless very resilient, as was seen during the Asian and Global Financial Crises, where the country bounced back in stronger form. 

The country’s 110-million strong population of young (average age 25), highly literate, and dynamic consumers, creates a demographic window that translates into a strong, robust market over the medium and long term. This, coupled with the government’s infrastructure projects, will serve as a growth engine and pave the way for a sustained recovery. 

With various infrastructure projects underway despite the pandemic, and with completion dates within sight, an appreciation in land values would definitely follow. 

Sustainable land value appreciation

In fact, despite the economic slowdown, land values have continued to climb across Metro Manila, including in Makati, Taguig, Pasig, Mandaluyong, Quezon City, and Alabang. 

This serves as an indication of how land values could further appreciate once the economy picks up. 

One compelling reason to invest at this time is that property prices, especially in the new growth centers such as Pasig and Quezon City, have not yet skyrocketed, thereby offering good upside potential. 

The second reason is the availability of credit from financial institutions, many of whom have become less stringent with their terms. For investors, this is a buying opportunity that seldom comes up.

Demand for office, residential spaces

Even as the Covid-19 pandemic persists, growth in the office space sector has stayed strong in 2020. 

Office space demand is still largely driven by BPOs, which could only grow stronger as global firms turn to outsourcing as a way to manage costs amid the  global economic slowdown. In fact, the Philippine outsourcing industry is expected to account for 22% of the global outsourcing market in 2022 and is forecasted to grow by 9% every 5 years. 

While the bulk of the current BPO seats are still in Makati, the combined seats in Pasig and Quezon City has now surpass that of Makati’s in number, showing the growth of these areas. 

The residential market also bucked expectations in 2020, with demand exceeding supply as investors saw a golden buying window during the pandemic. Take-up of pre-selling units were particularly strong in the P7-15 million and above P15 million ranges. This shows how the pandemic has reshaped the market’s requirements, with investors opting for features that are found in a high-quality properties.

Post-pandemic investor preferences

For instance, smart investors are showing a strong preference for micro cities, with proximity of one’s residence to the office becoming highly valued following the pandemic. 

There is an increased demand for condominiums in central business districts and mixed used developments within Metro Manila. There would also be a jump in the demand for affordable single detached homes with sufficient space outside CBDs, as more Filipinos work or study from home. All these will translate to an appreciation in property values, which will be highest for properties with the optimum potential for growth. 

Function has also emerged as an important consideration, with investors seeing condos as homes, halfway homes, and an investment for rent. Having units with the right cuts, open spaces, good ventilation, natural lighting, and right density are therefore very important. Investments in good filtration systems for enclosed common spaces are also needed.

Most importantly, a good location matters. Proximity to the international airport, transportation links, hospitals, schools, and commercial areas differentiates high-value properties from the rest. Properties located along growth corridors stand to benefit considerably from the government’s massive infrastructure program, which aims to link emerging growth centers and spur the development of new ones.

When investing in real estate, investors should choose a property that they can hold on to for at least ten years. Aside from the prospect of capital appreciation, they should also “look for a property that they love, that they can enjoy,” whether as one’s home or to pass on to their family members.

Meeting the design requirements in the new normal

Some developers have started to design their high rise residential units with an intentional design philosophy that revolves around the natural movement of it's resident. Its luxurious, spacious units with high ceilings and natural lighting, large amenity areas, and good ventilation system, create an airy, comfortable feel that is especially important among those who prefer to spend more time indoors. This will become a strong point for and investors’ design requirements in the post-lockdown world. The building’s layout, which puts a premium on privacy and comfort with a meticulous attention to detail, would seamlessly combines luxury and function.

New residences are now equipped with Smart Home features such as biometric fingerprint scanning, PIN code, RFID card access, smart digital locks for state-of-the-art security, smart mirrors, and smartphone-controlled lights and air conditioning system. These digital solutions, coupled with club-like amenities such as private lift lobbies will make some properties a future-proof investment. 

The merging strengths of world-class property developers

Most importantly, developers and property management from different property giants are now starting to merge their strengths to bring their expertise into their projects. Their solid track record in the real estate development will definitely become a deciding factors for investors, especially during a pandemic. Like the merging of HongKong Land and Robinsons Land Corporation (RLC) in a local residential project would certainly encourage other developers to follow their lead.