MANILA, Philippines — Amid the work-from-home disruption of the pandemic, Leechiu Property Consultants is bullish that this is the best time to construct office buildings since the benefits three years from now could prove bountiful.
In an online briefing organized by the Nordic Chamber of Commerce of the Philippines, David Leechiu, CEO of the private real estate brokerage, made the assessment on account of shrinking property spaces. As it is, many in the public and private sector were forced into work-from-home setups on account of the risk of infection posed by the airborne virus and mobility restrictions.
Data shared by the LPC found that office space demand in 2021 ballooned 39% year-on-year to 540,000 square meters, but this was partly due to dismal conditions at the onset of the pandemic in 2020. Of that figure, 48% of that appetite came from the IT-Business Process Management sector.
On a quarterly basis, office space demand grew in size by 74% in the final quarter of 2021 compared to the preceding quarter.
“Today is the best time to build an office building, by 2025 once it’s completed, there will be little stock. POGO gave up 60% of space. It’s easy for that to be absorbed by the normalization of demand,” Leechiu said in the briefing.
For one, the strength of Philippine offshore gambling operators waned as the pandemic dug its claws deep into the Philippine economy since travel and mobility restrictions nationwide were in play for most of 2020. This barred the entry of POGO workers into the country since most came from overseas such as China. This continued in 2021, as harsh lockdowns were imposed and lifted amid waves of infections.
The lifting of international travel restrictions could send POGOs and workers scurrying back to the country, if the government could resolve mobility issues, Leechiu points out.
Leechiu also perceived the robust business process outsourcing sector in the country, which he pointed out stood firm against the global health crisis, since 1.4 million people are employed today in the industry compared to the onset of the pandemic in 2020 as one of the factors that will drive demand for office spaces.
“Despite the policies and advantages of WFH, tenants are still taking space,” Leechiu added.
But LPC said that in the next four years, they expected a limited supply of new Philippine Economic Zone Authority spaces, which afforded benefits and concessions to business owners, that could prove challenging for the country’s burgeoning IT-BPM sector. The sector still led the pack in terms of demand in the fourth quarter of 2021.
Accordingly, the source of LPC’s optimism was rooted in the fact that they found 95-98% of office space tenants renewed their leases, boosting their optimism for 2024-2025.
LPC data revealed there were 224,000 square meters of active office leasing requirements that were due to be transacted within the next six months.
“Those that will have the guts will rewarded in 2024-2025, development is not just in Metro Manila,” Leechiu said.
“In the last two years, Iloilo came second after Metro Manila in terms of office spaces,” he added.
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The article was originally published in Phil Star Global and written by Ramon Royandoyan.
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