The Philippine office market continued to grow in the first half of the year despite the coronavirus disease 2019 (Covid-19) pandemic, a recent study from real estate firm Leechiu Property Consultants (LPC) showed.
LPC said new leases increased by around 50 percent or 77,000 square meters (sqm) with 42,000 sqm absorbed by the information technology-business process manufacturing (IT-BPM) sector.
Cebu served as the biggest recipient of demand at 40 percent.
LPC said there was no demand from the Philippine online gaming operators (POGOs) and other companies have cut back resulting in an 8-percent or higher vacancy rate or 89,000 sqm.
Of the vacated space, POGOs accounted for 54 percent and IT-BPM at 12 percent.
“Tax regulations and movement restrictions curtailed POGO growth and, in some instances, led to contraction,” LPC explained.
LPC Chief Executive Officer David Leechiu said the local office segment has not yet entered a point of contraction.
He added that the IT-BPM and POGO sectors would continue to be the driver of growth in the industry.
“Moreover, of the 482,000 sqm live requirements covering the second half of the year, 68 percent are from the IT-BPM and POGO sectors,” LPC added.
LPC sees total year-end office demand to hover between 600,000 to 800,000 sqm.
Leechiu recommended more support for the IT-BPM and POGO sectors as they are the “fastest growing job generators.”
“The sustained growth of these sectors will allow us to bounce back from this pandemic swiftly. We need as many employers as possible to help our economy,” Leechiu said.
Meanwhile, LPC said the residential sector remained active amid the pandemic.
The upscale segment registered sales, which partially made-up for declining revenues from the middle-income bracket.
LPC said the declining revenues were affected by displacement of overseas Filipino workers and local job losses during the period.
Capital values in major central business districts for both primary and secondary units softened by 5 percent and 10 percent.
As for tourism, LPC said domestic tourism is seen to lead the recovery of the sector in the coming months.
The firm also projects a resurgence in weekend tourism, supported by the improved infrastructure connectivity of Metro Manila to north and south Luzon.
“The second home market will experience a reawakening as outbound movement from the metropolis will put back the spotlight on resort-themed properties in locations like Bataan, Zambales, Tagaytay and Batangas,” LPC added.