The start of the year 2020 came with a succession of unexpected events. Without a doubt, the ongoing pandemic was the most remarkable. As part of the domino effects, many go out of business and massive amounts of jobs were lost.
Even after we won the war against COVID-19, the harm was done and it’s already hard to know when exactly everything will come back to normal. Thus, we now have the so-called new normal.
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The Anticipation Of What’s Coming Next
David Leechiu was regarded as the leading commercial real estate broker in the Philippines. To mention one among his business accomplishments, he made the sale of majority stakes in Ortigas & Company developer for an enterprise value not less than US$ 1 billion.
The world has never been through a worldwide health crisis for a century. Most businesses were hit hard and would take years to bounce back. As preparation, people should know what David Leechiu’s thoughts were about the future of businesses prior to the ongoing crisis.
BPO As One Of The Big Winners
Leechiu sees a bright future for the business process outsourcing (BPO) sector. He said the sector will resurge before the year ends as both the Philippines and the USA already adopted the new normal.
The Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno also has similar sentiments. “BPO remittances may not suffer as surmised since the sector was exempted from the lockdown,” he said in a text message to Philstar last April 30.
“BPO might be one of the big winners in this pandemic,” he added.
Also according to Diokno, the lockdowns gave rise to higher electronic and technological transactions. This is good news to help the 1.29-million-strong workforce to stay busy and productive.
Office Sector Will Remain The Primary Driver Of Real Estate
From an online briefing, Leechiu stated that the office sector will remain the primary driver of real estate this year. He said the sector will continue to grow from the information technology-business process management (IT-BPM) and Philippine Offshore Gaming Operator (POGO) industries.
He projected an office transaction space in the Philippines will range from 800,000 to 1 million square meters for this year. Despite offices not being used, he reported 95% of the office rents were still collected last April.
He also said, “We anticipate that everything that’s going on today will normalize by June, July, and August, and leasing will be significantly more and catch up beginning August all the way through 2020.”
In a released report, real estate professional services firm Colliers International believes the likelihood of the Metro Manila office sector to rebound in 2021, and that will also benefit the residential sector. The property consulting firm sees business districts like Fort Bonifacio, Alabang, Ortigas Center, and Rockwell Center as direct beneficiaries of the incoming demands for office spaces.
Social Distancing Will Require More Office Space
To respond to the new normal, many companies adopt the work from home (WFH) concept. To keep the business going, some companies even sent either desktop computers or laptops to the provincial homes of their employees.
However, Leechiu believes that WFH is not sustainable in the Philippines for the following reasons:
- Poor telecom connectivity
- Too many relatives and therefore distractions
- The hot climate and 70% of households don’t have air-conditioning unit nor roof insulations
- The risk for corporate fraud and corruptions due to less personal supervision
- For upper management, the WFH is doable except that their spouses will not tolerate the situation for long and may negatively affect their marriage
To make a long story short, Leechiu foresees the switch to WFH will not be for long. However, social distancing will still be part of the new company culture and may remain for a longer period of time. This would mean more office space requirements.
In London, research from WSP UK consulting firm suggests that the sustainability of WFH as the future of work requires a lot of considerations.
As his example, he stated that 1,000 people that use 6,000 square meters of office space would now need about 9,000 to 12,000 square meters. Of course, this is just a temporary measure. The bottom line is that this would be another factor for a significant demand increase in office spaces.
Western Companies Will Diversify And Open New Centers In The Philippines
According to Leechiu, Western companies that are based in China will diversify and open new centers in our country. Similar to what happened to POGOs, this will import more Chinese labor to work and live here.
However, he said that the impacts will be different from the POGO and are much more exciting. He projected a layer of demand not just in the office sector, but also in residential, retail, and tourism.
Japan Will Rediscover The Philippines
Leechiu also included in his forecast the big role of Japan in our economic progress. Besides the financial assistance for the ongoing construction of the <Metro Manila Subway>, Japan seeks more long-term projects with our government.
Japan, having the world’s highest percentage of elderly citizens, will consider the Filipinos’ big role for their retirement strategy, customer care operations, and health care. Bilateral relations among these two nations will continue to improve.
Recently, Foreign Affairs Secretary Teodoro Locsin, Jr. had a telephone conversation with Japanese Foreign Minister Motegi Toshimitsu to discuss diplomatic initiatives regarding the COVID-19 crisis. The Japanese official applauds our government’s efforts to help bring back Japanese nationals to their country.
Understanding The Past To Predict The Future
In everyday news, sometimes it seems like the coming of the apocalypse is at hand. For people who know history, every global crisis always has a feeling of anxiety, and yet the world continues to thrive.
This is not to discredit the realities of wars, tragedies, recessions, depressions, poverty, hunger, and deaths that happened in the past. But the addition of this recent pandemic greatly adds more burden to the business sector.
Leechiu predicted that half of the restaurants will not survive, especially those outside the malls which will result in less ground floor rents. However, he also stated that more brands will emerge.
He mentioned that the post-COVID-19 potential growth of the Philippines will be similar to the 2008 global financial crisis. During that time, he said the annual vacancy jumped to 365,000 square meters from 35,000 square meters. Also, he added that the demand grew to 400,000 square meters from 332,000 square meters.
Leechiu, having tons of business experiences and historical knowledge, could predict the future confidently. Knowing what to anticipate could be the greatest edge to succeed.
Looking for a condo unit around Ortigas? I am Glenn Dineros, a licensed Real Estate Broker with PRC License # 5171. Reach me +63 977 852 3852 or +63 939 588 9352. You may also send your email at firstname.lastname@example.org(opens in new tab) so I can help you locate yours.