The cases of COVID-19 continue to grow. Mass gatherings, schools, and businesses come to a complete halt as the whole Philippines is under lockdown to prevent the spread of the disease. What will be the fate of commercial real estate this April?
Market Still Stable Amid the Outbreak
Colliers International claimed that the commercial sector of the real estate market wasn’t badly affected since it had a great streak of demands and supply of office and retail spaces last year. In plain speak, the commercial market was more than stable as it exceeded the demand last 2019.
Nevertheless, as business owners prioritize the safety of their employees, the development of commercial spaces will pause. Business will take up again once things return to normal; the country has more than enough materials and space to supply the demands of local and foreign investors.
Even so, developing companies continue to strive in the midst of the terror caused by the pandemic.
Companies like Robinsons Land Corporation (RLC) already started developing four new buildings in Metro Manila — developments that have stopped because of the outbreak. Still, RLC produced a stunning ₱5.32 billion of revenue from its 23 developed office spaces in central business districts.
RLC was expecting to complete these 4 buildings at the end of 2020 to boost their revenues at least by 6%. Let’s see how that plays out.
BPO Companies, Lifting Up Our Worries
Another reason why the commercial sector of the market was still stable is because of the continuous operations of BPO companies.
Other businesses might be halting this month but it was still a normal day for BPO firms, one of the industries that has remained operational — albeit with a skeletal workforce.
Surprisingly, Santos Knight Frank reported that the office space demands from multinational BPO firms remain strong even after the government halted processing applications for economic zones in the country.
BPO companies continue to become a major driver in the commercial real estate market, which is why companies like Aboitiz Equity Ventures (AEV) continue to develop office spaces in provinces. The demands have to be met, especially outside of overpopulated Metro Manila.
Colliers reported that the AEV nets a total of ₱22 billion in its commercial sector as the company developed malls and office buildings in Cebu back in 2019. Despite the success of last year, AEV plans to develop more office buildings in Metro Cebu and is expecting to develop more at the end of 2020.
The Aboitiz Equity Ventures are also one of the giant companies who continue to donate medical supplies to COVID-19 front-liners to ease the outbreak in the Philippines until a cure is released.
The opposite outcome is observed in Italy. TheRealDeal reported that the commercial real estate market in Italy went down by 12%. This wasn’t the outcome that Italy expected since it produced a total of €3.6 billion of office investment. Just like the Philippines, Italy ended 2019 with great cash flow, until COVID-19 put a dent in plans.
Scenari Immobiliari, an Italian real estate research institute, stated that even though the market went down by 12%, the demands of office spaces in cities like Milan remained high. Which is why Scenari is expecting the market of Italy to bounce back once the crisis is over.
Going back to the Philippines, the BPO firms may be the ones who are keeping the market stable nowadays, but real estate research institutes must keep an eye on the flow of the market since the crisis isn’t over.
Will the Philippines have a great outcome at the end of 2020? Or will it have the same fate as Italy? Stay updated with the commercial real estate news by visiting https://housinginteractive.com.ph/