What’s next? A Forecast on PH’s Residential and Commercial Real Estate in 2021

2020 was a challenging time for the property industry, but signs of recovery in the latter part of the year gave a glimpse to a brighter, more hopeful new year. Philippine stocks rose to almost 7,300 level in mid-December due to higher remittances from overseas Filipino workers, according to a Manila Bulletin report published in mid-December 2020. The peso ended the year at 48.023 against the US dollar, its strongest since its closing in September 2016 at 47.99, Philstar reported in December 2020.

With the Philippines retaining its BBB credit rating, the prospect of mass vaccination in 2021, and improvement in market sentiment, property experts are optimistic of the opportunities ahead. In order to seize these opportunities, it’s necessary to know where the industry is headed. In this report, we’ll discuss what’s next for the country’s residential and commercial real estate industry, considering historical data from 2020.

Demand for residential property types

In 2020, the residential sector has seen demand fall due to the uncertainties of the pandemic, and rise back up as investors and homebuyers with more purchasing power started to regain their confidence in the market. As a result, the demand for all residential real estate types increased steadily from 1H2020 to 2H2020.  

Houses and land recorded the highest growth in pageviews, registering 33.03 percent and 30.24 percent, respectively. Condos posted an uptick of 5.37 percent, while foreclosed properties saw a 16.86 percent hike from 1H2020 to 2H2020. Foreclosed properties received more attention from property seekers in recent years with the more affordable offerings in some of the key regions in the metro. 

Projections for 2021

This upward trend lends a positive outlook for the residential market in 2021. Lamudi’s projections show that houses, condos, and foreclosed properties may see a spike in pageviews in 1H2021 from 1H2020. The number of people looking at houses is forecasted to climb by 3.01 percent, and 17.62 percent on condos. Foreclosed properties are estimated to experience a surge of 31.53 percent in 1H2021 compared to the same period last year.

The second half of the year will likewise be optimistic for houses and condos, comparing the figures to those projected in 1H2021. The number of house seekers will grow by 8.01 percent, and condo seekers by 0.92 percent.

Demand for commercial properties in cities with CBDs

Lamudi also looked at the performances of Metro Manila locations hosting central business districts (CBDs). In the previous trend report titled Hotspots Unwrapped: 2020’s Most Popular Locations, Quezon City, Makati, Pasig, and Taguig emerged as the top-searched locations, flexing strong residential real estate appetite amid the new normal of work-from-home.

As the residential sector bounced back in these cities, the commercial sector followed suit in 2H2020. The two real estate sectors complement each other: In the height of the enhanced community quarantine, some of the residential real estate offerings in CBDs were transformed into corporate housing near workplaces that remained open for essential business. In 2H2020, as restrictions on mobility started to ease up and more businesses planned to reopen or relocate, the demand for commercial properties all saw an increase in Quezon City, Makati, Pasig, Taguig, and Muntinlupa.

Projections for 2021

In Quezon City, demand for commercial properties last year was marked by significant growth, as it recorded an increase of 24.6 percent in pageviews from 1H2020 to 2H2020. From 1H2020, figures are projected to grow by 11.96 percent in 1H2021. Analyzing the entire year’s stretch, pageviews could rise by 3.29 percent from 1H2021 to 2H2021, according to projections.

In Makati and Taguig, estimated figures are all in the positive. Comparing 1H2020 to the projected numbers in 1H2021, Makati is likely to experience a 22.42 percent growth and a 20.79 percent increase in pageviews in 2H2021 compared to 2H2020. The forecast in the period 1H2021 to 2H2021 captures an uptick of 8.53 percent. In Taguig, Lamudi projects growth in pageviews by 4.81 percent from 1H2020 to 1H2021 and 7.18 percent from 2H2020 to 2H2021. 

Pasig experienced a strong demand in 2020, the second half of the year showing a 20.34 percent growth compared to the first. In Lamudi’s forecast, the number of pageviews for commercial properties in the city will grow by 4.49 percent in 1H2021 compared to the same period last year.

Meanwhile, Muntinlupa is predicted to gain 17.91 percent more in pageviews from 1H2021 to 2H2021. The city recorded a 39.49 percent growth in the period 1H2020 to 2H2020.

Demand for commercial properties in cities with technoparks

Provincial cities near the metro have been some of the most popular real estate investment locations in 2020, due in part to the pandemic boosting the warehousing and logistics sector and businesses moving to regions with easy access to the capital region. As property seekers and end-users move to the fringes of the metro, the demand for commercial properties increase in these areas to target the growing market. 

Locators may also be considering a move to the provinces spurred by the government’s projects to decongest the capital region and the completion of infrastructure projects making fringe cities gateways to previously inaccessible areas. The growing demand for commercial properties in provincial cities may also be due to the lower price per square meter compared to central business districts in the metro.  

In Laguna, Biñan, and Santa Rosa, two of the popular investment hotspots in the region, are the home of the Laguna Technopark. Both cities showed remarkable commercial demand in 2020, with Santa Rosa earning a 41.5 percent increase in leads in 2H2020 from 1H2020. The Laguna Technopark hosts 241 locator-companies and generated employment for over 100,000 employees, according to an economic performance indicator released by PEZA.

Comparing 2H2020 to 1H2020, Silang, Cavite posted the highest growth, recording a 54.85 percent growth in page views and 57.29 percent growth in leads for commercial properties. Silang is home to Sterling Technopark, a 100-hectare industrial estate with 21 operating establishments. 

Projections for 2021

Santa Rosa’s 1H2021 forecasted figures look promising, projecting an increase of 6.48 percent compared to the same period last year. In Silang, Lamudi expects a 40.17 percent hike in the number of pageviews for commercial properties between 1H2021 and 2H2021. Meanwhile, Biñan is projected to have a 13.32 percent growth in the mentioned period. 

Commercial demand for these locations may see further boost in 2021 as companies decide to relocate to less densely-populated areas, and new businesses turn to warehousing opportunities in the fringes of Metro Manila to gain easy entry and mobility servicing their clients in CALABARZON and the rest of the Southern part of Luzon.