Everything You Need to Know About the Real Estate Industry in the Philippines and its Trends for 2022 (InCorp)

Business Opportunities
June 6, 2022 - InCorp Global Pte Ltd

This is a thought leadership article on the real estate industry in the Philippines and its trends for 2022 from PrimeGlobal member firm InCorp Global Ltd in Singapore.

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With a large density of tourists, an increasing number of expatriates, and numerous investment opportunities provided by the government, the Philippine Real Estate Industry is a thriving and robust market that actively caters to the needs of its growing population. Investors, entrepreneurs, and organizations that wish to start a business in the Philippines will likely need to set up a headquarters or back-office space to operate smoothly in the country.

From business real estate to commercial real estate, this article will provide thorough detail about the real estate landscape of the Philippines and how you can take advantage of the opportunities provided in the industry.

The Real Estate Landscape of the Philippines

In the second quarter of 2021, the real estate industry generated over ₱126 billion in revenue. Its growing middle-class population and consistent remittances from Overseas Filipino Workers (OFWs) make the industry one of the key drivers to the Philippine economy.

The country’s constant efforts to ease doing business in the Philippines allowed foreign enterprises to continue to invest in its real estate market. At present, the value of approved real estate activities due to foreign direct investments (FDIs) amounted to ₱507 million.

Trends for Commercial Real Estate

The Philippine government has been proactively seeking ways to further its economy and recover from the crippling effects of the COVID-19 pandemic. Measures such as Build Build Build, along with numerous business-friendly regulations, are constantly promoted to entice and increase inbound FDIs in the country.

In a report by Lamudi, the demand for commercial real estate in the Philippines has significantly increased throughout the years. Central business districts (CBDs) in Metro Manila such as Taguig, Makati, Pasig, and Quezon City are emerging as one of the most searched locations for commercial real estate in the country.

Beyond the metro, regional hubs in Baguio and Angeles, Pampanga in Luzon, Cebu City in Visayas, and Davao City and Cagayan De Oro in Mindanao are also viewed as key locations for commercial real estate investments.

Despite COVID-19, numerous organizations seek ways to amplify the use of a hybrid work setup that provides safe working spaces for enterprises and individuals who require headquarters or office spaces to operate their businesses.

IT-Business Process Outsourcing (BPO) Sector as Top Buyer

The IT-BPO sector in the Philippines is predicted to increase its real estate investment in 2022. The country’s BPO sector accounts for 15% of the global BPO market, ranking as one of the top outsourcing hubs in the world.

The influx of FDIs allowed the industry to obtain more and more real estate to cater to their business operations and working spaces their-inhouse employees. According to the Philippine Economic Zone Authority (PEZA), the industry receives an increase of 37% in IT-BPO management pledges from foreign investors.

Despite the ongoing COVID-19 pandemic, PEZA claims to foresee the leasing of condominiums and other properties to escalate in the next 18 months as the industry continues to expand.

Growing Popularity of Co-Working Spaces

Recently, the trend of using co-working spaces to conduct meetings, projects, and even business operations has been continuously rising in the Philippines. Due to its flexible and cheaper options, many companies are opting to lease co-working spaces to complement existing headquarters.

According to Colliers Philippines, flexible working spaces are seen to expand by 10% in the next three years. Such spaces allow enterprises to provide a closer option for employees as social distancing and workplace restrictions emerge amid COVID-19.

This enables remote workers, freelancers, and other independent professionals to work together in a communal setting, providing a more efficient and work-life balance-friendly alternative.

FDIs Contributing to Growth of Commercial Real Estate

In 2021, there has been an influx of inbound foreign investments in the Philippines, amounting to ₱36 billion worth of investments from various countries. According to the Philippine Statistics Authority (PSA), countries such as the United States (US), Taiwan, and Japan, have made investment pledges around ₱13 billion, ₱4.4 billion, and ₱4.3 billion, respectively.

Additionally, the number of approved FDIs is expected to generate approximately 24,000 jobs, increasing the demand for workplaces to cater to the industrial and commercial needs of enterprises doing business in the Philippines.

Trends for Residential Real Estate

The residential sector of the real estate industry in the Philippines also possesses an increasing growth of investments as the population continues to grow in the country.

Impact of OFWs Investing into Residential Real Estate

The Philippines is one of the largest recipients of foreign remittances globally. In August 2021, the remittances from Overseas Filipino Workers (OFWs) were over US$2.6 billion, a 5.1% growth from the same period in the previous year.

The purchasing power of OFWs enables them to invest in numerous residential areas across the Philippines. Most OFWs return home soon after their contract ends or for retirement. In a survey of 10,000 OFWs in 2019, over 80% consider investing in residential properties in the Philippines in the next 12 months.

Many developers provide a wide range of residential properties, from high-class villages to affordable mid-range townhouses, allowing OFWs to find their desired home or provide homes to their relatives in the Philippines.

Rise of Green Spaces

Apart from creating residential and commercial properties, property developers, along with corresponding local government units (LGU), are looking into developing more green spaces in the Philippines.

Office and residential spaces in Metro Manila are expected to develop more sustainable and eco-friendly office and residential spaces, utilizing green technology during the development and construction of the properties as well as its post-development maintenance. According to Colliers Philippines, around 37% of the building in Metro Manila from 2021 to 2023 are likely to become wellness-certified buildings.

The emergence of Microcities

A city within a city. Microcities are a mix of residential and commercial buildings clustered into one location, designed to provide amenities such as groceries, malls, gyms, salons, and the like. These developments are structured to provide state-of-the-art amenities and 21-century demands.

Such development is aimed at the growing population of millennials transitioning into finding residential areas that fit their needs. Existing microcities such as the Cebu IT Park in Cebu City is a primary example that best reflects the characteristics of microcities in the Philippines.

Invest Into the Real Estate Sector in the Philippines

With its strategic regional location, robust consumer market, and fast-growing economy, the Philippines is an ideal investment location for foreign entrepreneurs who wish to establish a business in the country and penetrate the Asia-Pacific region.

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InCorp Global Pte Ltd

Headquartered in Singapore, InCorp Global is a leading corporate services provider, with an established regional presence across seven Asian countries, including Indonesia, India, Hong Kong, Philippines, Vietnam, and Malaysia. The group services more than 12,000 corporate clients across various industries, including asset / fund managers, as well as family offices. They are official partners with key government authorities in the region, such as Singapore’s Economic Development Board, a government agency that is tasked with bringing in foreign direct investments into Singapore.

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