The Philippine real estate industry contributes significantly to the country's Gross Domestic Product (GDP). In the face of inflation and a pandemic, like what the global community experienced in 2020, real estate proves to be a resilient industry with fewer risks compared to other long-term investment vehicles. This 2023, the overall outlook for the succeeding days and months in the real estate market is optimistic.
If you need a comprehensive guide on what experts say about real estate investments in the Philippines this year, from commercial, residential, and industrial real estate properties, Lumina Homes will demystify insights based on expert predictions from property consultancy firms.
2023 Real Estate Outlook: Predictions and Expectations
Below, we will examine the expert predictions of industry leaders and what it means for real estate developers, investors, and homebuyers this year.
1. Philippine Property Recovery Will Persist
According to a report issued by Lobien Realty Group, the past year was a resounding success for commercial real estate. Furthermore, the report indicates that 21 percent of these commercial establishments and retail spaces in the National Capital Region (NCR) have an average lease rate of ₱1,150 per square meter.
With this upward trajectory, the property consultancy group casts its optimism that 2023 will be a year to continue the Philippine real estate market's recovery from all the economic adversities experienced since the start of the pandemic. In addition, Lobien reported that warehouse facilities would likewise grow. In point of fact, this segment of industrial real estate was the only one to experience an 8.2 percent growth while the pandemic was ongoing.
Much of this growth, not needless to say, was due to the tremendous upsurge in e-commerce sales during the pandemic when most physical retail stores were left with no choice but to close down amid fears of coronavirus contraction.
Also read: COVID 2023 Predictions and Philippines’ Road to Pandemic Recovery
2. Real Estate Property Prices Will Increase
An increase in real estate property prices is attributed, in part, to increasing market demand. Besides this, the accelerating inflation rate and consumer price index (CPI) in the country are one of the major economic headwinds that render property prices to increase. From an 8-percent inflation rate recorded in November 2022, it increased to 8.1 percent in December of the same year. As of January 2023, Bangko Sentral ng Pilipinas (BSP) reported an 8.7 percent inflation rate, .6 higher than December 2022.
Rising interest rates are another factor contributing to the increase in real estate property prices. Higher interest rates are a result of increased demand for real estate properties. This upsurge also makes it harder for borrowers to avail of and qualify for loans from banks.
3. Property Supply Will Remain High
In its official report, Colliers, a leading property investment consultancy company, deduced that the improvements in office leasing deals, greater supply and demand in the pre-selling condominium market in Metro Manila, and an upsurge in hotel occupancies and average daily rates (ADRs) in 2022, among others, will spill over 2023.
Office. Colliers believes that there will be a positive net take-up for the office sector this year. This means that the supply of commercial spaces will be met with high demand and actual physical occupation of leading industries such as IT-BPM companies and other sectors in the legal, government, and engineering fields. With this, Colliers encourages office developers to take advantage of this recovery in office leasing and build new office towers.
Residential. Colliers' housing market predictions conclude that there will be 5,600 new condominium units. In the latter part of the year 2024, the total number of condominium units in Metro Manila's major business districts is expected to reach 166,400 units. As this part of the residential market recovers, Colliers urge real estate developers to invest in "sustainable and green features," as well as to integrate favorite amenities such as large, open spaces and greener areas.
Retail. Colliers sees the completion of 448,900 square meters' worth of new retail spaces this year. Colliers also expects that rents will recover due to the improvement in retail space absorption and an increase in mall consumer traffic. Both foreign and local retailers are also anticipated to occupy physical mall spaces, as more and more shoppers frequent malls as they do during pre-pandemic times.
Industrial. With the new administration pushing for better industrialization, Colliers deems it highly likely that investing more in the manufacturing sector will be instrumental in the bigger inflow of investments. To boost economic growth outside the metro, prioritizing this sector will greatly benefit industrial parks located in the provinces, particularly in northern and central Luzon. Colliers also reported that about 112 hectares of industrial supply are set to be available in the provinces of Laguna and Batangas.
Hotel. Finally, hotel occupancies are also expected to continue increasing in this post-pandemic setting. According to the Department of Tourism, the targeted 1.7 million foreign arrivals were already exceeded and reached 2 million as of November 14, 2022. With eased travel restrictions and the state-greenlighted resumption of classes and physical meetings, the hotel sector, Colliers confides, can expect the opening and development of more hotels.
4. OFW Remittances Will Continue Being a Boon to PH Property Market
Overseas Filipino Workers (OFWs) have traditionally been a major player in the demand for residential real estate properties in the country. Official reports are unanimous in concluding that OFW remittances will help fuel the demand for more housing units.
In her keynote speech during the 31st-anniversary celebration of the National Real Estate Association (NREA), chairperson emerita Marissa “Del Mar” Magsino said that our modern-day heroes are expected to "lead the push" in the demand for residential property investments, and are key drivers in the availing of affordable to middle-income price segments of real estate properties.
Is 2023 a Good Year for a Real Estate Investment?
Most, if not all, key indicators point to the fact that investing in real estate remains to be a profitable venture for investors this 2023. With real estate property hikes expected, now is the ideal time to invest in the Philippine real estate industry and bear the fruits of property value appreciation over time.
If you have the money now, delaying your real estate investment and homebuying journey may not be the best idea. The real estate industry holds a reputation for being resilient in times of economic downturns such as a recession and a global virus outbreak. It is for this reason that investing in this sector entails fewer risks yet more chances of giving your desired returns in the future.
Lumina Homes, one of Vista Land's modest housing segments, is a reputable developer of affordable house and lot for sale in the Philippines. This is backed by recognitions given by Pag-IBIG Fund and last year's Carousell Property Awards, both recognizing Lumina Homes' affordable housing provisions for low- to middle-income Filipino families.
When aiming for an affordable house and lot, it is only wise to look for a trusted real estate brand to seal your property investment. With more than 10 years of award-winning industry experience, Lumina Homes will certainly fulfill your lifestyle needs with our quality house models and amenities. Attain your newest house and lot in the Philippines with Lumina Homes this year and become the latest Lumina homeowner!
