The State of Real Estate
The National Economic and Development Authority (Neda) is looking at negative 0.6 percent to 4.3 percent growth in 2020 due to the COVID-19 pandemic. The Finance department is looking at a “zero to possibly negative 0.8 percent” economic growth. Meanwhile, the Asian Development Bank is projecting a 2 percent GDP growth this year, slower than its initial 6.2 percent forecast, but a faster one in 2021 at 6.5 percent.
Colliers sees residential demand in Metro Manila softening in 2020 due to the adverse impact of the COVID-19 pandemic. If the virus is contained in the first half, we may see market sentiment improving starting the third quarter and a recovery in demand and supply in 2021. Among the major concerns for the residential sector are unemployment, business and consumer confidence, and OFW remittance inflows. On the supply side, the work stoppage due to enhanced community quarantine (ECQ) will delay project completions.
Colliers believes that social distancing will likely be part of the new normal even if the government lifts the ECQ . Hence, a significant number of retail shops are still likely to be closed by then. But these brick-and-mortar retailers may tap the demand by expanding their online presence. Retailers may create their own e-commerce sites, utilize existing sites of major mall operators, or use popular social media platforms such as Facebook and Instagram.
In our opinion, the recovery of the property sector in 2021 hinges on the pace of expansion of Philippine and global economies.