Based on data, 2022 was the third-best year in office leasing.
Office demand in key cities in the Philippines roared back last year, just as the country was beginning to shed all COVID-19 restrictions and despite market volatility caused by the war in Ukraine.
That’s according to Leechiu Property Consultants (LPC), which held its briefing for the first quarter of 2023 on Wednesday, April 19.
Leasing demand for all of last year hit nearly one million square meters (sqm), positioning it as the third-best year to date and underscoring the sector’s resilience.
The trend held up in the first quarter of 2023, too. The consultancy has registered 264,000 sqm in office demand so far this year, more than double the same period in 2022, despite the protracted war in Ukraine leading to high interest rates in many places.
“The BPO (business process outsourcing) sector created more jobs in the Philippines as the world went into crisis,” David Leechiu, founder and CEO of LPC, told “One News Now.” “Will that continue? Well, the first quarter is usually the slowest quarter of the year. And yet [we’re] off to a very strong start.” The company expects to close out the year with similar numbers as 2022, “if not better.”
Cebu is leading the provincial market, followed by Clark. Despite interest in Iloilo and Davao, the brokerage says companies are unable to expand there due to limited inventory. The firm says there’s much interest in Bohol and Bacolod as well.
What about the threat of artificial intelligence (AI)? Last year, the IT and Business Process Association of the Philippines (IBPAP) said it expects to create over 1.1 million jobs in the country over six years. But lately, much ink has been spilled over robots taking away outsourcing roles.
LPC says there’s still time for the Philippines to recalibrate and upskill its workers.
“Even if the AI is so sophisticated, even with ChatGPT, it still takes a while for companies to adopt AI at scale,” Leechiu noted during the company briefing. “That process to achieve scale could take 7 years from today. They will probably take jobs out in the West first, before they take jobs from the Philippines and India.”
Meanwhile, space demand from Philippine Offshore Gaming Operators (POGOs) has stagnated with around 11,000 sqm leased in the first quarter of 2023, as the Senate debates next steps. The Ways and Means Committee under Sen. Sherwin Gatchalian wants a blanket ban, while the Committee on Public Order and Dangerous Drugs led by Sen. Ronald “Bato” Dela Rosa is proposing they be moved to controlled hubs similar to economic zones.
“Maybe the solution there is to have hubs as well as [have them] immersed in the city,” Leechiu told One News Now. “Because at the end of the day, if you want this industry to grow or at least manage it, you have to make them assimilate in the communities instead of isolating them in so-called POGO hubs like what they did in Cambodia.”
In the residential market, LPC says demand is already at 93 percent of pre-pandemic levels, driven by activity in the business hubs of Bonifacio Global City and Makati.
Per LPC data, only the lower middle segment–or those condos being offered for between P1.4 million to P2.3 million–is seeing a slowdown.
In fact, a new “hyper luxury market is emerging” in the country, where units are cut above 500 sqm each and only one or two sit on each floor in the building.
LPC declined to provide more details, but in March, Singaporean luxury hospitality brand The Banyan Tree Group unveiled Banyan Tree Residences Manila Bay, its first property in the Philippines.