More hotel closures in 2021—Santos Frank Knight

Real estate and property services firm Santos Frank Knight (SFK) anticipates more hotel closures as professional engagements with clients yielded a pronounced increasing trend of intentions to sell hotel properties.

“You know how hard they were hit during the pandemic. I believe that some will be for sale,” said SFK director for investments and capital markets Kash Salvador.

Company president Rick Santos disclosed they’ve had a lot of talks with hotel owners and “we’ve had discussions through webinars with the various chambers of commerce and the Department of Tourism (DOT) that the sector is in dire need of capital.”

He added that many hotels have repurposed their facilities into a longer-stay residential function that also serves as work-from-home facilities for a number fo companies.

---

---

The incoming office supply of about 1.2 million square meters in 2021 is also expected to add to vacancy pressure not only for the office sector but for repurposed tourism accommodations including hotels.

According to SFK senior director for occupier services Morgan McGilvray office vacancy went up to 10 percent in 220 from 4 percent in 2021.

“That’s a little more than doubled. I wouldn’t be surprised if supply exceeds demand by 13 to 15 percent as 2021 pipeline supply comes in with spill-over from 2020. I could say that 20 percent could still be healthy for the Philippines and this will give BPOs a lot of good choices,” he said.

Outlook for office market better

The outlook for the office market is generally better than 2020, although it is unlikely to see an immediate return to the pre-pandemic level. While COVID-19 forced occupiers to adopt remote work setups, the office sector may see a gradual return by tenants to the physical workplace this year.

In 2021, SFK expects tenants —especially BPO companies—to resume scouting new locations for expansion and office rightsizing requirements. With vacancy high and asking lease rates having grown by only 1.7 percent in 2020, the availability of a greater amount of fitted space and prime office space, which were once difficult to secure, is seen as an opportunity for companies aiming for better locations.

Meanwhile, the residential market is expected to display a slow but steady rebound with the sector leaning in favor of buyers. The property services firm sees more opportunities for residential buyers with better deals in terms of price and payment terms.

---

---

Industrial, logistics will be stable

Across the real estate sector, industrial & logistics were the most stable asset class last year and 2021 will likely see a repeat of that, SFK noted, driven by deeper e-commerce penetration, demand for COVID-19 vaccines, and new infrastructure. Cold storage facilities, warehouses, and distribution centers will be in demand this year, while data centers present a long-term opportunity for both the sector and the country.

The firm observed that the physical shop’s loss and the downward pressure on the retail market has been industrial & logistics’ gain. E-commerce continues to contribute to the expansion of the industrial & logistics sector. Online retail in the Philippines is expected to grow by 26 percent in 2021.

SFK expects the capital market for the industrial and logistics segment to become more sophisticated as venture capitalists and investment firms place the sector high on their list.

#realestateblogph | #realestateblogphpropertynews | #REBPH | #realestate | #SantosKnightFrankPH | #hotel | #hotelclosures | #hospitality

---

Article and Photo originally posted by Manila Standard last January 30, 2021 6:00pm and written by Othel V. Campos.

About Post Author