Date: December 11, 2023
As the Philippines navigates the economic aftermath of the global pandemic, the real estate industry stands tall, showcasing resilience and growth. Despite challenges faced by various sectors, the local real estate market has not only weathered the storm but has flourished in unexpected ways. In this blog post, we'll delve into the factors driving the surge in the Philippine real estate industry, particularly in Manila, and examine the intriguing dynamics influencing the market.
The Steady Rise of the Philippine Real Estate Industry in 2023:
The past few years have witnessed a remarkable transformation in the Philippine real estate sector. In 2022, amidst economic uncertainties, the housing market showed signs of improvement, a trend that has continued into 2023. According to COL Financial's overview performance report, major Philippine real estate developers have experienced significant growth in revenue during the first half of the year. This upward trajectory can be attributed to a combination of factors, including a recovering economy and increased property investment opportunities.
Economic Factors Driving Growth:
Inflation, a concern in various sectors, is expected to decrease from 7.6% to 6% by the end of the year. This projected decline is anticipated to lead to a halt in interest rate hikes, potentially broadening the real estate market's appeal and resulting in increased revenue. The positive effects of multiple economic factors are evident, with major real estate developers reporting a robust performance, showcasing an average net profit of 31.5% year-over-year.
Shift in Property Preferences:
A notable shift in Filipinos' property preferences, influenced by the pandemic, has played a role in the real estate market's growth. The trend towards horizontal living spaces, as noted by Ovialand, Inc.'s CEO Pammy Olivares-Vital, has become more than a pandemic-induced choice—it is now the preference for many Filipinos. This shift has led to increased demand for properties outside Metro Manila, contributing to the overall expansion of the country's real estate industry.
Challenges for Home Improvement Businesses:
While the real estate industry thrives, major home improvement companies like AllHome and Wilcon Depot have faced challenges. Despite the growth in the real estate market, these companies experienced a downturn in profits during the first half of 2023. Changes in consumer behavior, particularly a desire for 'revenge traveling' and other leisure activities, have impacted the revenue of these businesses as pandemic restrictions eased.
Outlook for 2023:
The positive momentum in the Philippine economy, marked by its fastest growth in over four decades in 2022, sets the stage for a thriving property market in 2023. The anticipated slowdown in economic growth does not dampen the optimistic outlook for real estate. Office space take-up remains strong, residential markets rebound, and government efforts to attract manufacturing investments are expected to boost industrial space absorption. Developers are urged to focus on key growth areas beyond Metro Manila to capitalize on the evolving landscape.
As the Philippines continues to navigate the challenges and opportunities of a post-pandemic world, its real estate industry stands out as a beacon of growth and resilience. The evolving preferences of property buyers, coupled with favorable economic conditions, contribute to the industry's positive outlook. Despite persistent challenges in certain sectors, the overall trajectory paints a promising future for the Philippine real estate market in 2023 and beyond, especially in the vibrant city of Manila. Bed&Go offers a diverse range of living options, tailored to fit your style, whether you're living solo, with family, acquiring an office space for your startup, or seeking an investment with growth potential that also benefits others.