In the face of easing pandemic restrictions, the re-opening of the economy could result in a positive year for the real estate sector. Resilient sectors such as industrial & logistics will still continue to thrive while a rebound is to be expected for the outsourcing industry and the office owners due to the return-to-office programs.
What are the commercial real estate sectors to look out for?
Digital transformation accelerated by COVID-19 has increased the growth of Data Centers due to the heightened demand for co-location, internet, and cloud services. The Philippines is the perfect spot for data center operators. This is due to the overall high digital consumption, which will draw in more investments into the country similar to the first-mover YCO Cloud Centers with their 12 MW Data Center in Malvar, Batangas.
By 2022 it is expected that real estate players will focus their developments in the industrial & logistics sector. Particularly, there will be a focus on the underserved areas such as North Luzon, that have good accessibility from Metro Manila.
The average prime warehouse rent in Manila has remained stable during the second half of 2021. However, these are expected to increase for the next year. Overall, Manila has a lower average rent on warehouses compared to other cities in Asia Pacific, an advantage that keeps costs relatively low and encourages more expansion for businesses.
The rise of e-commerce keeps the demand for warehousing and storage spaces steady. This makes it a lucrative opportunity for property players to further develop to meet the needs of the market.
To date, the Philippines has five Real Estate Investment Trusts (REITs) with more to be expected in the medium term. These REITs will not only just have traditional assets like offices but also non-traditional ones like energy, infrastructure, parking spaces, and data centers.
The question for REITs has been about their sustenance in value, capital and strategies such as asset acquisition. This has been practiced by REITs in other markets and can also be soon adopted by their Philippine counterparts.
The office market will generally be positive despite the fact that there will be expansions or right-sizing, according to a prediction by Santos Knight Frank. The increase in the outsourcing requirements from countries like the U.S., Australia, and Europe will increase the footprint of IT-BPO companies in the real estate sector. Meanwhile, the companies adjusting to the remote or hybrid work model may likely optimize their offices by the time their leases expire.
New workplace strategies are being implemented by companies as a response to the demands that arose during the pandemic, making models like the “Hub & Spoke” office setup relevant as it decentralizes the office to bring it closer to their employees. Some tenants have also been looking into expanding their offices in more than one area as a business continuity strategy due to the effects of both localized lockdowns or typhoons.
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Knowing the key areas of the real estate sector for 2022 is important for any property investor. Get industry-best advice on the right properties to invest in with real estate services company Santos Knight Frank. We offer a range of services ranging from brokerage, consultancy, asset management, property management, and more. Learn more by visiting https://santosknightfrank.com.