PH Property Market Anticipates 2022 Recovery

Date: May 23, 2024

PH Property Market Anticipates 2022 Recovery

With the early signs of recovery spotted in the second quarter of 2021, the property market is poised to bounce back from the pandemic next year, according to the Bangko Sentral ng Pilipinas, as Philstar reported. 

Its recovery will coincide with the projected improvement of overall economic growth in 2022. The BSP attributes this optimistic outlook to the gradual relaxation of restrictions on mobility and economic activity. 

Property Demand Picking Up

At the height of the pandemic in 2020, with the lockdown measures in place, capital values for office and residential units experienced a decline, especially in the business districts, BSP reported. In contrast, there’s renewed property appetite in these locations this year, which may contribute to the growth of prices, as the market anticipates recovery in 2022. 

According to Lamudi’s quarterly trend report, the top viewed cities in Metro Manila in the second quarter of the year were mostly central business districts, namely Quezon City, Makati, Taguig, Pasig, and Parañaque. 

Interestingly, the luxury residential segment, properties priced P12M and up, dominate Metro Manila listings on the platform, followed by upscale properties priced P6M to P12M. 

The property consultancy firm Colliers Philippines earlier reported that there’s a rising demand for luxury and mid-income residential projects, regarding it as a bright spot for the real estate sector. The government’s vaccination program, which prompts reabsorption of office spaces, will support the improved residential demand, the firm said. In the same way, the discounts and two percent interest rate placed by the Bangko Sentral ng Pilipinas will prop up the sales of residential projects.

In terms of residential property types, houses were the most searched in Lamudi from the second quarter of 2020 to the second quarter of this year, as cited in Lamudi’s report. It also sustained the highest quarter-on-quarter growth in the first half of 2021. Land, on the other hand, registered the highest year-on-year increase in leads.

Meanwhile, in the office sector, the business process outsourcing (BPO) industry leads market recovery. Colliers Philippines credits this positive development to the gradual reopening of the United States’ economy and ensuing expansion of BPO operations to areas outside the capital region. 

The strong office take-up of the BPO firms (IT-BPM) contributes to a resilient REIT market as well, as mentioned in Business World. According to Leechiu Property Consultants, REIT companies register a 90 percent or higher occupancy rate on commercial spaces because of the IT-BPM locators.

Higher Demand for Real Estate Loans

The renewed property appetite this year matches the stronger interest for real estate loans. Local banks observed active lending activity, with borrowers maximizing the low-interest rate available and the sustained rebound from the pandemic’s economic ills, according to Philstar.

BSP reported a marginal net increase in demand for commercial real estate loans in the third quarter of the year. Meanwhile, housing loans are poised to have a net increase in demand in the fourth quarter, fueled by “more attractive financing terms, lower interest rates, and consumers’ increasing housing investments.”

On commercial real estate loans, local banks became stricter in overall credit standards in the third quarter, as there was reduced tolerance for risk and “deterioration in borrower’s profile.” During the period, the country dealt with economic uncertainties as well, with the rising number of COVID infections brought by the Delta Variant. 

In the same way, banks tightened lending standards for housing loans in the third quarter of the year. But they are expected to ease this fourth quarter, as financial institutions project improvements in borrowers’ profiles and a more optimistic economic outlook.

Based on BSP’s latest figures, there was a 7.2 percent increase in loans released to the property sector, reaching P1.82 trillion, representing 19.7 percent of the total lending portfolio of universal and commercial banks. 

Meanwhile, Pag-IBIG Fund set a new record-high for home loans in the period of January to September, as mentioned in this Manila Times report. The releases amounted to 65.48 billion, increasing by 80 percent from P36.43 billion in the same period in 2020. 

Notably, the figure is 11.5 percent higher than the P58.73 billion recorded in the same period in 2019. The latter is deemed as the agency’s strongest performance.

Source: Lamudi Philippines

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