Online Manila | Property Trends 2023 Philippines – How Buyers and Sellers Can Benefit | Will 2022 momentum continue? Will market factors make 2023 the year the market goes insane again?
Homeownership remains a top life ambition. Arriving home after a long day is the best feeling. Unfortunately, each year produces more Filipinos while the country’s land remains the same. The most popular areas are either full or too expensive for most Filipinos. The Philippines real estate industry and many local developers remain hopeful that every Filipino can buy a property.
Work-from-home is nearing its end as the main work style. Most companies have reopened, so many workers are back. However, this flurry of actions associated to returning to work highlights certain key facts. First, COVID-19 is still spreading. Thus, whatever progress made in 2022 could be reversed. Second, the global economy is unstable.
Philippine Real Estate Market 2022
Let’s review 2022 before predicting 2023’s Philippine real estate market. 2022 was transitional. The transformation goes beyond national government leadership. Last year bolstered the COVID-19 pandemic transition. Thus, Philippine apartment sales and mall space rentals increased.
According to Collier’s Philippine Property Outlook issued in December 2022, condo pre-sales in the first nine months surpassed 2021. Between January and September 2022, Colliers recorded 14,900 condo sales. 2021 sales totaled 12,400 units. 28% of these condos are sold to mid-income buyers for P3.2 million to P6 million. The increasing dollar exchange rates are benefiting many OFWs in this sector.
Office, Retail, and Tourism Improved in 2021
Office space demand is returning to pre-pandemic levels. Due to protracted shutdowns in the first two years of the pandemic, Colliers reported office space take-up decreased by 181,3000 sqm in 2020 and 273,100 sqm in 2021. Thankfully, last year’s reopening momentum will assist close 2022 with an estimated 140,000 sqm gain, or 19.5% vacancy.
Retail and tourism also saw improvements. Malls flourished in 2021 but accelerated in 2022. Colliers anticipated 16% year-end retail vacancy. As of November 2022, tourism has 2 million visitors, surpassing its 1.7 million target. Thus, Metro Manila’s first-half 2022 hotel occupancy of 47% exceeded 2021’s 44%. MICE events resumed, increasing hotel occupancy and spending. The Department of Tourism proudly claimed P100.7 billion in tourist spending in the first nine months of 2022. This exceeds 2021’s P4.9 billion.
Major Developers Agree 2022 Reopened Philippine Real Estate Market
Major Philippine real estate developers agreed that 2022 achieved recovery progress. Sales increased unexpectedly, mainly from OFWs and internationals. Many developers want to build more homes to meet the eight million-unit shortage. Ohmyhome interviewed Filinvest Land, Federal Land, Ortigas Land, Bria Homes, and SMDC executives by email. Most agreed that 2023 is the greatest moment to invest in Philippine real estate for Filipinos, especially OFWs.
2023 Philippine real estate market factors
2023 intends to keep the momentum from 2022. COVID-19 vaccinations, mask use outside houses, and knowledge helped the Philippines mitigate the pandemic’s worst impacts. According to the World Health Organization, 90% of the world’s population is now virus-resistant, which helped. Government and commercial operations resumed when COVID-19 was decreased.
Before discussing 2023 Philippine real estate market trends, let’s review some external issues that may impact the business.
The Asian Development Bank expects the Philippines to expand 6.3% in 2023, down from 6.5% in 2022. The Development Budget Coordination Committee (DBCC) predicted 6% to 7% growth this year, which matches the ADB’s prediction. Even at 6.3%, Philippines
Experts predict a global economic slump somewhere. The World Bank expects 2023 global economic growth to peak at 1.7% and 2024 at 2.7%. Inflation, interest rates, and investment are contributing to the recession. Russia’s war with Ukraine disrupts the energy and financial markets.
Pandemic supply chain issues continue to cause price inflation. Thankfully, economists predict a 4.3% inflation rate this year, down from 5.3% in 2022. The ADB forecast and DBCC consensus range of 2.5% to 4.5% in 2023 are similar.
In 2023, Philippine real estate remains positive. Fitch expects real household consumption to climb 5.5% this year, down from 7.6% in 2022. However, experts predicted family income growth to outpace inflation. This boosts consumer confidence and expenditure.
2023 Philippine Real Estate Market Predictions and Trends
In 2023, the Philippine real estate market is bullish. Federal Land Sales Group Head Guita Saenz-Resurreccion reported a rise in unit purchases in the first nine months of 2022, surpassing their totals from the previous year. Estrellita Tan, Bria Homes’ COO, said the urge to shift to remote-work-friendly places drove up property prices.
All developers thought real estate’s 2022 momentum would continue this year. In 2023, these tendencies are expected to grow:
Trend 1: Infrastructure and transportation projects will boost residential development in Central and South Luzon.
The federal government is boosting infrastructure and transportation improvements. These projects decongest Metro Manila roadways and allow provincial centers to become metropolitan centers. The LRT-1 Cavite expansion, MRT-7, Cavite-Laguna Expressway, and North-South Commuter Railway would be completed in three years. The renovation of Clark International Airport to handle more daily passengers can also attract individuals and businesses to Pampanga and nearby regions. These new transport hubs aim to make suburban employees’ commutes into Metro Manila and distant provinces easier.
Many developers started residential developments in Cavite, Laguna, Bulacan, and Pampanga. SMDC Zeal Residences in Camona and Avida Aldea Grove Estates in Angeles are examples.
Trend 2: Revenge Spending Will Drive Mall Demand and Benefit Mall Operators
Many households spend until 2023 despite inflation fears. Many families were idle for years due to longer indoor time and limited travel possibilities. Retribution spending is rising as the economy improves.
Malls and retailers saw this spending spike. Many opened full-time during mall hours in 2022. Malls are presently at 85-90% occupancy, up from 40% in 2021. Many households will continue their vengeance spending binge this year as their spending power rises. Add more foreign retail, lifestyle, and dining brands. Thus, malls should lease all retail space by 2023.
Trend 3: Expect more tourists, hotel stays, and tourist spending.
In 2023, Colliers expects 3,900 more hospitality rooms to serve travelers. More foreign-branded hotels will welcome Philippine guests in three years. New hotels in key commercial districts are a priority. The Bay Area, Makati, and Ortigas are developed.
This impacts local real estate. Developers must build more mixed-use condos that can be timeshare hotels or condotels. In 2023, homeowners can buy condotels or turn their homes into AirBNBs.
Trend 4: Industrial Parks to Revive Industry
The DTI reported in June that foreign companies pledged over P500 billion in investment between 2023 and 2024. These investments will aid the administration’s industrial revival. Developers are building business parks. This applies especially to locations with improved transportation.
Central and South Luzon, Visayas, and Mindanao developers expect more business. Developers are building industrial parks and residential clusters nearby. OFWs and other Filipino investors may want to investigate industrial park executive and professional developments.
Trend 5: Offices in More Provinces
Metro Manila decongestion will continue this year. Colliers noted that several outsourcing firms and significant local enterprises are evaluating their business continuity strategy. Many companies are hiring local talent since remote work is the future.
Business decentralization from Metro Manila requires a rush to create office buildings and hubs in major provinces. However, another move to meet residential housing demand followed. Particularly in Iloilo, Pampanga, and Baguio.
SOHO and Green Initiative Demand
New homebuyers are reconsidering their wants due to remote work. Many now want a home or condo with SOHO space. Homeowners want their workstations ready for another epidemic or remote work. Residential workspace-friendly condos and loft-enabled units became popular.
Despite global warming, the global green movement grows. Millennial and Gen-Z homeowners are pushing for energy-efficient, environmentally friendly green homes. Smart homeowners would aggressively seek developments that promote their green and sustainable lifestyle in 2023 due to high utility and fuel expenses.
The Philippine Real Estate Market in 2023: Nowhere to Go but Up
The numbers and trends suggest that 2023 will deliver the goods for the real estate sector. The reopening of the country to local and foreign businesses, plus the anticipated increase in purchasing power, can push a return to the country’s pre-pandemic prosperity levels. Continued improvements in the economy, infrastructure, and transportation all promise to increase the country’s attractiveness to investors. No industry offers more potential than the real estate market in 2023.
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