COVID-19 UPDATE: State of the Property Sector in Metro Manila
As you may know, the Philippines have been under a series of quarantines for the past seven months. Metro Manila began from enhanced community quarantine (ECQ), modified enhanced community quarantine (MECQ), and now, we are under general community quarantine (GCQ) as safety precautions to combat the spread of the COVID-19 virus.
For these reasons, several sectors have taken a hit that shifted the whole world and the property sector was not excluded. Metro Manila took the harshest hit by being the epicenter of the pandemic. Numerous businesses and offices needed to close to accommodate the rules that came along with quarantine.
With quarantine, the demand for new homes, condominiums, office spaces, lowered as much as 8%. Not included are the off-shore gaming firms run by Chinese Investors or POGOs. Despite having controversial issues such as employment of illegal Chinese workers, it is not a secret that they provide support to the property market. They require office buildings and occupies residential units for workers.
During the COVID-19 pandemic, many Chinese workers returned to China in fear of catching the disease, leaving condominium buildings vacant. According to Finance Secretary Carlos G. Dominguez III to senators on September 23, 2020, that a building owner called him in regards to his Pogo and service provider-clients canceling their lease because of lack of business.
In the last two months, POGO workers including Filipino workers have been laid off because of the bad economy brought on by COVID-19. Joey Bondoc, senior manager of property advisory firm Colliers Research told Inquirer, that POGOs covered an estimate of 11% total leasable office space in Metro Manila and if all POGOs leave there will be a 16% office space vacancy.
Not only that, Colliers said that they can see vacancy rates rising from 11.8% to 14-15% by the end of 2020. This is because POGO workers have condominium units that will be abandoned and are already vacant since the start of the pandemic.
Colliers also said in a report on March 31 this year that 18% of new condominiums are vacant. A significant rise from last years' report that was 11% vacancy rate. The outbreak affected hotels as well, which saw occupancy rates drop to just 35% from 71% in end-2019 because of the Chinese travel ban in place since the first week of February.
However, reports also showed the good in all the bad. An unexpected perk of all of this is the fact that condominiums are offered at a low price. With the lack of demand for living and office spaces, developers are expected to be more aggressive in offering discounts and flexible payment terms for pre-selling residential projects. If you are planning on investing in condominiums, now is the perfect time to look.
To learn more about the state of Real Estate, check out our previous entry, “The COVID-19 Effect: Unexpected Impact of Coronavirus to Real Estate.” And if you want to learn more about Bed and Go and Real Estate, we encourage you to read our blogs.