Like any other industry, the real estate sector is not exempt from the effects of the COVID-19 pandemic. Real estate prices dipped as office spaces were vacated with lockdown protocols, and quarantine orders brought construction to a standstill.
As restrictions ease and the economy slowly recovers, real estate companies and holders now have to address the pandemic’s aftereffects. After being confined in their homes for months, consumers today have changed their buying behavior, thereby affecting market prices and trends.
For individuals seeking to invest in a real estate property, knowing the following trends may help them make a smarter decision on which type of property to purchase. On the other hand, companies in real estate can prepare for upcoming changes and find the best course of action for their business.
Expansion of the Industrial and Logistics Sector
The COVID-19 pandemic took a high toll on many companies. Countless small businesses closed, and even some of the bigger companies needed to downsize their operations. One industry, however, significantly prospered with the new social conditions: the industrial and logistics sector. This is primarily due to the boom of e-commerce activities. According to Statista, Filipino customers are turning to online platforms for their shopping. As the e-commerce sector grows, so will the need for industrial parks, distribution centers, storage facilities, and icehouses to store goods.
While Metro Manila is the primary hub for online retail, real estate experts predict that companies will shift their industrial and logistics facilities outside of NCR. The next industrial hotspots could potentially include CALABARZON, which had the next highest amount of online retail activity, and the areas surrounding NLEx-SCTEx-TPLEx in Northern Luzon.
BPO Companies Remain as Top Buyers
The business processing outsourcing (BPO) industry is the most expansive private employer in the Philippines. With 1.3 million employees across 1000 firms, they are one of the top clients for office spaces in the country. When the COVID-19 restrictions were imposed, however, the office segment of real estate took it particularly hard. BPO companies had to quickly adjust to the new changes, including vacating, sanitizing, and converting office spaces.
However, employees are slowly coming back to the office, and the BPO industry continues to grow. This growth is fueled by the quickly rising need for outsourced workers in the game development, animation, and healthcare sectors. Hence, the BPO industry’s need for more office spaces does not seem to be declining soon, and experts predict that BPO companies will be expanding beyond NCR in the long run.
More Co-Working Spaces for a Shifting Employee Demographic
Co-working spaces are, in essence, shared working spaces. Employees from different companies—whether local or international—work in the same office, sharing equipment, utilities, and custodial services, among others. Co-working spaces are becoming more popular not only for helping companies save on expenses but also for making the office more accessible and convenient for remote employees.
While co-working spaces stray from the traditional office setup, they are an effective way of addressing changes in employee needs. The pandemic has created a shift in how workers manage their own productivity while working from home. Additionally, the new generation of workers places a higher value on maintaining a healthy work-life balance and sees remote work as instrumental to achieving this balance.
Some investors estimate that flexible workspaces will see more growth in the next few years as more businesses revisit their operations in the context of a post-pandemic world. Indeed, the Philippine business sector is already slowly adapting as the market has seen the entry of more local and international co-working brands in recent years.
Increased Demand for Sustainability and Green Spaces
In line with the global wave of environmentalism and increased demand for sustainable practices, the real estate industry has become more conscious of its environmental impact. Moreover, it is not only them; property owners have become more aware of it, too.
As such, several companies, investors, and home seekers now consider sustainability as part of their property checklist. Green solutions, designs, and systems are lauded and even place infrastructures on the premium side. For example, office buildings in Bonifacio Global City that have been certified by LEED’s (Leadership in Energy and Environmental Design) building system boast of a 12.5-percent higher lease price compared to their non-certified counterparts. As climate change continues to be an urgent global concern and more companies take an active role in reducing their environmental footprint, the demand for sustainable and efficient office spaces is expected to grow.
Overall, the Philippine real estate sector is in the middle of a lot of changes. As consumer habits and employee mindsets shift, real estate investors and sellers must carefully consider their next moves to make the right call. With all that said, one thing becomes clear: the real estate industry will continue to thrive and develop in the upcoming years.