By Revin Mikhael D. Ochave, Reporter
SURGING demand across various sectors is expected to drive the Philippine real estate sector’s return to pre-pandemic levels, industry experts said.
“The country’s real estate sector will continue to grow next year. We’re actually going back to pre-pandemic levels in 2024,” McKinsey & Company Philippines Managing Partner Jon Canto said during the BusinessWorld Forecast 2024 economic forum in Taguig City on Nov. 22.
“Philippine real estate has been resilient but sustained demand and investments will take it to the next level,” he added.
Mr. Canto said that optimism for the real estate sector is driven by increased foreign tourists, surging investment pledges, higher property prices, and sustained demand in the office and retail segments.
“We are optimistic about real estate. It is one of the sectors that is going to rebound fully next year. It has been resilient in the wake of COVID-19, inflation, and rising construction costs,” Mr. Canto said.
Noli D. Hernandez, Megaworld Corp. executive vice-president for sales and marketing, said the Philippine real estate sector has been doing well despite rising inflation.
“Overall, despite the surging inflation, I would like to say to you that the Philippine real estate sector has been doing very well,” Mr. Hernandez said.
The country’s inflation rate decelerated to 4.9% in October from 6.1% in September amid the slower increase in food prices.
“For our office and hotel businesses, we have also seen a surge of investor confidence and as far as retention levels of tenants are concerned, these have been steady and even increasing,” Mr. Hernandez said.
“Similarly, we’re seeing a very huge demand coming from the MICE (meetings, incentives, conferences and exhibitions) industry. We have been seeing not just an increase in occupancy rates but also an increase in room rates,” he added.
According to Mr. Hernandez, the risk posed by inflation to the real estate sector’s recovery could also become an opportunity.
“While inflation poses a threat, it also can serve as a boon to the industry because we know that real estate investment still remains to be a very good hedge against inflation. On one hand, there is the threat posed by inflation as a deterrent to the impulse to invest but on the other hand, it can be the same impulse that will generate more interest in the industry,” Mr. Hernandez said.
Meanwhile, Federal Land, Inc. President William Thomas F. Mirasol said the company is seeing increased consumer confidence and “favorable opportunities in the high income and luxury market segments.”
“Higher interest rates naturally bring down demand. But as the economy is growing, we see more consumers that are more confident in the future. They’re saying that the interest rate is higher than it used to be, but it is not that scary,” Mr. Mirasol said.
Mr. Mirasol also called for better infrastructure such as roads in order to bring down property prices.
“No developer wants to raise its costs more than absolutely necessary. Developers also want to reach a broader market. If the nation had better infrastructure, like if you live in Cavite and you work in Metro Manila and it was only a 20-minute drive, then we would see lower property prices,” Mr. Mirasol said.
“The key to making sure that prices don’t rise unreasonably is going to be infrastructure. One of the biggest cost drivers for real estate is the cost of land, and while land remains isolated, it is very difficult for people to move around from one place to another. That’s why you see pockets of development that tend to rise at a much faster rate than any other area,” he added.
