Oct 08, 19By Andre Mercado

Times are changing faster than many industries, including real estate, can keep up with, and the arrival of the future is creating upheaval among those still stuck in the past. This is true in real estate as it is in any other, and more so in the Philippines, a country currently in the middle of an economic transformation.

The “Disruptors”

For example, the current generation of workers is adapting to a new, more holistic lifestyle. A record number of individuals are buying condominium units in the Philippines, and the numbers are expected to grow. 

According to a residential property market report by Colliers International Philippines, about 52,600 condominium units sold in Metro Manila in the fourth quarter of 2017. This is significantly higher than 2016’s figure at 42,000 units sold. 

Real estate consultancy firm Pronove Tai suggested that the record high in condominium take ups in 2017 was attributed to factors such as the country’s robust economy, record-high OFW remittances, and dollar exchange, and the low-interest environment.

Pronove Tai CEO Monique Cornelio-Pronove said in an interview with BusinessWorld that the demand was also attributed to the rise in property interest from the young urban professionals and foreign nationals demographics.

The young professionals, she said, “dominate the working force in office districts and spend more than any other demographic age due to lifestyle orientation, particularly employees under the IT-BPM (Information Technology and Business Process Management) industry.”

Citing a report by the Japan International Cooperation Agency, Cornelio-Pronove added that the flexibility offered by vertical living spaces has also become more appealing due to the country’s worsening traffic congestion. Workers are choosing to live closer to their workplaces rather than spend three to four hours on their daily commute.

“In addition, these young professionals want to avoid the inconvenience of Metro Manila traffic which reduces productivity and practicality as commuters spend an average of 3-4 hours per day in traffic. For efficiency and convenience, these young professionals prefer to invest in condominium buildings for comfort and lifestyle,” she said.

Conversely, flexible workspaces are becoming common in the office property market. In its The Flexible Workspace Outlook 2018 report, it read that flexible workspaces are no longer seen as a disruptor nor a complementary sub-sector in the office market, but rather “a fundamental part of commercial real estate and a sector in its own right”. Continued growth in flexible workspace demand is expected across key submarkets in Asia-Pacific including the Philippines.

Maricris Sarino-Joson, Colliers International Philippines’ Associate Director for Office Services, said that flexible workspaces in the Philippines is forecasted to grow along with the attention that the country is garnering from foreign investors.

She said, “Over 200,000 square meters (2.15 million square feet) is occupied by flexible office space operators in Metro Manila alone, with many still looking to expand this year. The profile of tenants using these spaces varies from start-ups to law firms, MNCs and freelancers.”

“We expect international flexible workspace operators to penetrate the Philippine market in 2018, though given the nuances of the domestic market, this will likely be in partnership with local developers or investors, and in some cases via acquisitions,” Sarino-Joson added.

In the same Colliers report, it stated that as small and medium businesses in the Philippines expand, the demand for flexible workspaces would follow all across the country. Aside from Metro Manila, Colliers also sees potential in Cebu, Bacolod, Iloilo, and Davao in terms of flexible workspace demand.

“Given the range of end-users in a flexible workspace, we expect a wide geographical spread, and operators will likely set up several smaller sites rather than fewer large scale sites due to challenges in transport infrastructure. For this reason, we may see space within retail malls repositioned as a flexible workspace,” Sarino-Joson quipped.

Although it is expected that the condominium unit sales numbers will be significantly lower in 2019, the report said it is due to the lack of available land in prime urban areas and the premium prices of land in major central business districts. However, with a benign inflation environment this year, Colliers said it will likely prevent further interest rate increases by the local central bank. As such, demand from the affordable and mid-income residential segment would be sustained this year.