Niche Real Estate Assets Show Optimism in 2021

Niche real estate assets will likely see greater demand after the pandemic, according to a top property consultancy firm, Business World reported.

Based on the survey Santos Knight Frank conducted, half of individuals whose net worth goes over $1 million are looking at healthcare investments. About 42 percent are eyeing offices, while 33 percent are considering real estate for retirement. Meanwhile, 25 percent of the surveyed individuals want investments focused on industrial and logistics.

A number of high net worth individuals hope to upgrade their family residence, improve leisure, or facilitate permanent movement. One in every three individuals considers buying a new property for these reasons.

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In terms of sentiment, these people have a soft level of optimism this year. The decline of activities in certain industries amid the pandemic caused a major blow on rich Filipinos, especially those who have investments in retail, hospitality, and aviation.

Niche Industry Growth

The healthcare business process outsourcing (BPO) industry is expected to expand moving forward from the pandemic. Back in October last year, experts forecasted that the sector will increase in revenues by 7.3 to 10.8 percent and in headcount by 6.8 to 10.2 percent from 2019 to 2022, Malaya reported. This growth may drive office take-up and recovery in leasing activities.

At present, the country provides a range of BPO solutions, namely practice management, medical coding and quality audit, claims and payment management, clinical document improvement, telehealth, and clinical trials.

Meanwhile, in the retirement niche, real estate appetite is strong among overseas Filipino workers (OFWs). In Lamudi’s year-end report titled Hotspots Unwrapped: 2020’s Most Popular Locations, the age bracket 45 to 54 drove the majority of the inquiries on the property platform in 2020, about 28.6 percent. The report suggested that older generations of Filipinos abroad may be considering investing in real estate for retirement.

As for industrial and logistics real estate, the sector will reap benefits from the continued demand from the e-commerce industry. 

In December last year, Colliers International Philippines mentioned in CNN that warehousing already represented 70 percent of the Philippines’ economic output, along with the increase of storage investments in the country. Transportation and storage also accounted for 33 percent of the total foreign investments approved in the first half of 2020.

Given this trend, brick-and-mortar stores have been repurposing facilities, converting retail facilities to microwarehouses, to tap into the promising e-commerce demand.

Post-Pandemic Prime Locations

Real estate opportunities may likewise be present in Metro Manila cities that remained popular amid the pandemic. According to Lamudi’s forecast report titled What’s Next? A Forecast on PH’s Residential and Commercial Real Estate in 2021, demand in cities hosting central business districts will remain stable. 

The real estate interest in Quezon City, indicated in page views, is expected to grow by 3.29 percent from the first to the second half of 2021. In Makati, it will increase by 8.53 percent. Taguig will see a 15.87 percent hike in the mentioned period, while Pasig will have 7.01 percent. Muntinlupa, meanwhile, is set to see a 17.91 percent spike.

Provincial cities hosting technoparks will likewise command strong resilience, according to Lamudi’s report. This includes Biñan, Santa Rosa, and Silang. The pandemic has highlighted the preference for cities outside Metro Manila, with businesses improving continuity and expanding operations in these areas.

Massive Infrastructure Projects

The demand for niche real estate types and certain locations will be supported by the resumption of construction on infrastructure projects from the national government. 

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The capital region is set to benefit from the first mass underground transport network, the Metro Manila Subway. Last month, the Department of Transportation (DOTr) unveiled the tunnel boring machines to be used to dig underground, ABS-CBN reported. 

The regular passenger service will start by 2025, but some important facilities of the subway system, including the East Valenzuela station and the depot Philippine Railways Institute, will run partial operations by the end of 2021. The subway system will run from Quirino Highway in Quezon City, traversing Katipunan and Shaw Boulevard, and will end at Ninoy Aquino International Airport (NAIA) Terminal 3 in Pasay.

Meanwhile, infrastructure projects that will benefit nearby provincial cities include LRT-1 Cavite Extension, North-South Commuter Railway, and Cavite-Laguna Expressway (CALAX) Laguna segment.

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Article and Photo originally posted by Lamudi last March 12, 2021.

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