Outlook | Manila | 20 December 2021

Bound for rebound:

Property stakeholders anticipate recovery in 2022

Insights & recommendations

The Philippine property market is poised for a rebound in 2022. The improving vaccination rate
complemented by rising consumer and business confidence should inject a much-needed boost to
the sector. We encourage stakeholders to remain proactive to capture gains in 2022.
• Office developers should continue lining up projects while tenants should prepare for a return
to office and look at the viability of opening office in core locations.
• Residential developers should launch new projects in anticipation of pent-up demand.
• Mall operators should be mindful of sizes of new retail outlets to open in the next 12-24 months
given Filipinos’ rising propensity to shop online.

Rental Market Vacancy Supply

In 2022, Colliers projects new supply to
reach 723,400 sq m (7.8 million sq ft). We
see office deals picking up within and 3.8% 17.8% 723,400 sq m
Office
outside of Metro Manila starting in 2022.
We project delivery of 9,700 units in 2022,
up 18% from 8,200 units in 2021. We see the
Residential Bay area likely accounting for 60% of the 1.7% 17.3% 9.700 units
new supply. Prices and rents to recover.
Colliers sees the delivery of 523,700 sq m of
new retail space. We project rents to recover
on the back of increasing vaccinations and a 1% 17%
Retail 523,700 sq m
rise in consumer spending.
We expect vacancy to drop to 5.5% and
rents to increase by 3.0%. We also anticipate
an increased demand for warehouses from
Industrial 3.0% 5.5% 28 ha
e-commerce and logistics firms.
Average Daily Occupancy Supply
Rate (ADR) Rate
In 2022, we see the completion of 1,900
rooms in Metro Manila. In our view, revenge
travel among domestic travelers should help
Hotel USD64 45% 1,900 rooms
push hotel occupancies across the country.
Source: Colliers
Note: USD1 to PHP50 as of the end of Q3 2021. 1 sq m = 10.76 sq ft. *Covers upcoming industrial space in the Cavite-Laguna- Batangas (CALABA)
corridor. Industrial rental market refers to lease rates for Standard Factory Buildings (SFB) in CALABA.
1

“The Philippine property market is raring to
roar back in 2022. In our view, office,
residential, retail, and industrial sectors will
benefit from a macroeconomic rebound.
Landlords should prepare to capture pent-
up demand while tenants and investors
should maximize opportunities as the
market is on its way to recovery.”
Joey Roi Bondoc
Associate Director, Research
Office: The great return
In our view, any rebound in office leasing will be
supported by a successful Covid inoculation
program. Data from the Department of Health
(DOH) show that about 41.5 million Filipinos have
been fully vaccinated as of December 13, 2021,
or 54% of the country’s eligible (77.1 million)
population. About 40 million vaccines are still
expected to arrive before the end of 2021. The
Philippine government projects about 50 million1
to be fully vaccinated by the end of 2021. Colliers
believes that the increase in inoculation rates will
enable employees to return to the office.
Despite the implementation of work-from-home
(WFH) arrangements, some firms, including
outsourcing companies, continue to look for
office space across the country. We see these
leasing queries materializing over the next 12
months which would anchor a recovery in office
space take-up within and outside Metro Manila.
In 9M 2021, Colliers recorded 302,600 sq metres
(3.3 million sq feet) of office deals, up a decent
2% from the 295,800 sq metres (3.2 million sq
feet) recorded in the same period last year.
Traditional occupiers†† covered 61% of the total
Metro Manila office transactions
Legend:
YOY POGO† KPO Voice Traditional††
44% 49% 2% 32%
9M 9M
2020 2021 48K 27K 71K 36K 37K 36K 140K 185K
Source: Colliers; †Also known as Philippine Offshore Gaming
Operators. ††Traditional occupiers includes companies such as legal,
engineering and construction, government agencies and flexible
workspace operators.
transactions in 9M 2021 followed by outsourcing
firms. Among the companies that took up space
during the period include Shopee, Chinabank,
Grab Philippines, Asian Carmakers, Nu Skin
Philippines and other logistics firms.
As some occupiers continue to vacate office
space in Metro Manila, Colliers retains its
vacancy forecast of 15.6% by the end of 2021.
Colliers sees a potential rebound in office space
absorption in 2022 with the improvement in
business sentiment in the next 12 months
complemented by greater vaccination rates.
The central bank’s Business Expectations Survey
(BES) in Q3 2021 noted that the availability of
more vaccines, easing of lockdowns, and
improving economic conditions are likely to
support an improvement in business activities. In
our opinion, the recovery of major economies
such as the United States could also play a role in
sustaining demand particularly from outsourcing
firms beyond 2021.
Green Edge: Future-proofing office demand
Colliers also sees more landlords and occupiers
embracing the healthy and sustainable route to
office development and leasing. We believe that
the adoption of sustainable office spaces plays a
crucial role in future-proofing office towers
beyond 2022. In our view, there will likely be a
heightened preference for sustainable buildings
that provide natural lighting and optimize air
quality, among other features. Over the next
three to five years, these features should result
in utility and talent acquisition cost savings and
contribute to healthier and more productive
workforce. From 2021 to 2023, about 40% of the
Share of each province to total provincial
office transactions, 9M 2021
Metro Manila
Pampanga Laguna transactions,
9M 2021
13% 10%
303K sqm
Cebu
Iloilo
Total
30% provincial
19%
transactions,
9M 2021
Davao 87K sqm
10% Source: Colliers
1Gov'taims to vaccinate 70% of population by February election
period 2
Upcoming and existing sustainable buildings across the country
Gross Leasable
Completion
Building Name Location Area (GLA, Building Certifications
Date
sqm)
Makati Commerce Pre-certified LEED (ver 4) Gold,
Makati City 56,000 Q3 2022
Tower aiming for Platinum
Menarco Tower Fort Bonifacio 25,500 LEED Gold and WELL Gold Certified Q3 2017
The Brilliance Center Fort Bonifacio 5,100 LEED aiming for Silver Q3 2019
The Podium West
Ortigas CBD 104,000 Pre-certified LEED Gold Q3 2019
Tower
Jollibee Tower Ortigas CBD 54,200 Pre-certified LEED Gold Q3 2020
One Trium Tower Alabang 28,500 Pre-certified LEED Gold Q4 2021
DoubleDragon Plaza Bay Area 130,000 LEED Gold Completed
DoubleDragon Tower Bay Area 38,000 Pre-certified LEED Silver Q1 2022
Damosa Diamond On track for BERDE
Davao 20,600 Completed
Tower On track for EDGE
Phase 1 –
Pre-certified LEED Gold
On track for BERDE Completed
Cebu Exchange Cebu 108,500
On track for EDGE
Phase 2 – Q2
On track for WELL
2022
Faustina Center Cebu 21,400 On track for EDGE Q4 2021
Source: Colliers. Note: LEED = Leadership in Energy and Environmental Ortigas CBD and the Bay Area continue to be
Design; EDGE = Excellence in Design for Greater Efficiencies; BERDE =
Building for Ecology and Responsive Design Excellence
attractive office hubs in Metro Manila, covering
45% of total transactions in the capital region. In
new supply will be Leadership in Energy and
our view, the availability of options in prime
Environmental Design (LEED) or WELL-certified
locations and attractive rents should enable
buildings. Most of the buildings due to be
tenants to move from non-core to core locations
completed will offer lower density ratios, curtain
including major business districts.
wall systems with thermal insulation, touchless
access in elevators, vertical gardens, UV We recommend that tenants take this
disinfection lifts and filtered air circulation opportunity to prepare for a return to the office,
systems to ensure a healthy and efficient while renovating and assessing the optimal level
workplace for traditional and outsourcing of split operations.
occupiers.

Colliers also sees continued space absorption
outside Metro Manila. We project this to be a
crucial part of tenants’ business continuity plans
(BCP). As of 9M 2021, provincial transactions
accounted for 22% of total transactions in the
Philippines, with Cebu leading at 26,000 sq
metres (279,800 sq feet), followed by Iloilo.
On average, office rents in Metro Manila
declined by 5.6% QOQ in Q3 2021. Colliers
projects a further correction particularly in
submarkets with substantial space vacated due
to lease terminations and significant amount of
upcoming supply. In 2021, we see rents dropping
by 20% before a gradual recovery starting H2
2022.
Residential: Rise of the north
In the next 12 to 36 months, we see the
completion of major infrastructure projects such
as the NLEX-SLEX Connector, North-South
Commuter Railway and the Central Luzon Link
Expressway (CLLEX) likely benefitting key
provinces in Northern-Central Luzon including
Pampanga and Bulacan. These will be
complemented by the completion of Bulacan
International Airport and expansion of Clark
International Airport. Aside from improving
connectivity, these infrastructure projects should
also raise land values outside the capital region.
Among the ongoing township developments in
Northern-Central Luzon corridor are Rockwell’s
Nepo Center in Angeles, Pampanga which will

3
feature mid-rise residential condominiums and a Major infrastructure projects in Luzon
Powerplant Mall; and Megaworld’s Northwin Bulacan International Airport
Global City in Marilao, Bulacan which will feature (35kms north of Manila)

high-rise residential condominiums, shophouses,

Quezon City
office buildings, hotels, schools and malls.
Valenzuela
NLEX Harbor Link Metro Manila Subway (2025)
The rise in residents’ purchasing power in key
NLEX-SLEX Connector
provinces such as Cavite, Laguna, Bulacan, and Road (2022)
MRT 7 (2022)

Pampanga encouraged developers to build malls

and recreational facilities alongside office, LRT 2 East Extension
(completed)
residential condominium buildings and
Manila Mandaluyong
institutional facilities such as schools and BGC-Ortigas Link Bridge Pasig
Estrella-Pantaleon
hospitals. (completed)
Bridge (completed)
Skyway Stage 3
(completed) Makati
Colliers believes that the government’s
Bay Area Pasig River
decentralization program and major public Taguig Expressway (2023)
infrastructure projects should push developers
to launch more master-planned communities Parañaque
outside of Metro Manila.

Data from the Philippine Statistics Authority Las Piñas

Skyway SLEX
(PSA) show that millennials (aged 25-34) account Extension
Muntinlupa
for about 28% of the country’s labor force. (completed)
Colliers believes this workforce population will Source: Colliers

sustain demand for integrated communities. The
concept of building offices, condominiums, malls,
schools and hospitals within one community
satisfies the millenials’ demand for greater
mobility and convenience.
Colliers also believes that Bulacan will most likely
be an attractive residential investment
destination as it will benefit from major
infrastructure projects. In our opinion, the
Bulacan Airport, or New Manila International
Airport, should help decongest Ninoy Aquino
International Airport (NAIA). The completion of
Outside Metro Manila, where are you likely to
invest (vertical or horizontal) in the next 12 to
24 months?
11%
36%
17%
18%
19%
Source: Colliers Q2 2020 Briefing Survey
MRT-7 should also contribute to raising Bulacan’s
attractiveness as a property investment hub.
Residential demand should also be anchored by
the growth in Overseas Filipino Worker (OFW)
remittances. Data from the Bangko Sentral ng
Pilipinas (BSP) or central bank show that cash
remittances in September 2021 reached USD2.7
billion (PHP135 billion), up 5.2% YOY. For 2022,
BSP forecasts a 4% growth in remittances.2
Retail: Revenge shopping and
dining to spur recovery
The Department of Trade and Industry (DTI)
reported that malls and restaurants are
recording consumer traffic of between 50-80%3
of pre-Covid levels following the easing of
Bulacan quarantine restrictions in the capital region since
November 2021.
Pampanga
In our view, the Filipinos’ growing propensity to
Batangas
shop online is among the top factors that will
Cavite likely influence physical mall space absorption
Laguna
beyond 2022. The Department of Trade and
Industry (DTI) projects the number of domestic
online businesses will reach 750,000 in 2021
before rising to about 1 million in 2022.4 Colliers
recommends that retailers expand their
2BSP sees remittances rising 6% this year; 3DTI estimates mall
crowds at 50-80% of pre-pandemic levels; 4DTI eyes e-commerce
industry growing to 1M merchants by 2022 4
Household spending subsegment growth, Q3
2020 vs. Q3 2021
25%
20% 5%
3% 4%
0%
-20%
-5% -10%
-40%
-14%
-24%
-60%
Q3 2020 Q3 2021
Source: Philippine Statistics Authority
e-commerce presence and maximize
technological advantages. We have seen retailers
complementing their physical stores with online
platforms. For instance, IKEA, which recently
opened its 5-storey shop in Pasay City
(reportedly the world’s largest) 5, also launched
alongside a 24/7 online store. Brick-and-mortar
stores should also be proactive in partnering
with mobile wallet apps for ease of payment,
especially for older customers.
Over the next 12 to 24 months, we encourage
mall operators to be cautious of new supply.
Colliers observed that developers have been
cautious in completing new malls and this was
evident in 2020 when only 53,100 sq metres
(571,400 sq feet) of new space was completed.
This is significantly lower than the annual
average of about 323,200 sq metres (3.5 million
sq feet) of new supply from 2017 to 2019.
Some of the new and upcoming retailers include
Decathlon in SM North EDSA and SM Mall of
Asia, M Bakery at Powerplant Mall and Adidas at
Glorietta 3. The renovation of Greenbelt 3 has
also been completed and houses several
international luxury brands including Louis
Vuitton, Dior, Bvlgari, Rimowa, Hermes and
Kenzo. The easing of lockdowns in Metro Manila
has also allowed the reopening of leisure and
entertainment facilities such as arcades and
cinemas in limited capacities, provided that they
follow the government-mandated health and
safety protocols.
Colliers recommends that mall operators be
flexible with their space usage by maximizing
their space for opening pop-up stores, utilizing
available facilities such as activity centres for
Covid vaccination drives as well as introducing
20%
alternative dining options (e.g. Park and Dine,
11% and al fresco dining).
We see vacancy rising to about 17% in 2022
partially due to the substantial new supply of
-54% -52% about 523,700 sq metres (5.6 million sq feet)
likely to be delivered and tepid demand because
of the changeable lockdown situation in Metro
Manila.
Although the vaccination rate is improving, the
sudden spike in cases and existence of new
Covid variants usually compels the government
to raise lockdown levels, restricting consumers’
mobility.
In 9M 2021, retail rents dropped by 5% from a
10% decline in 9M 2020. We expect rents to
recover slowly starting 2022 with an improved
vaccination program and a government-
projected economic recovery spurring an
increase in consumer spending. Meanwhile, the
Philippine Retailers Association (PRA) has pushed
back their recovery projection from 2021 to
20226 due to the re-imposition of a stricter
lockdown in August 2021 in Metro Manila.
Metro Manila retail supply and vacancy
forecast, (2008 – 2022F)
600,000 20%
400,000
10%
200,000
- 0%
New Supply Vacancy at Year-End (RHS)
Source: Colliers
Leisure: Local tourism to stoke
hotel demand
Data from the Department of Tourism (DOT)
showed that tourist arrivals as of the latest
available data of 5M 2021 reached 46,322, down
97% YOY due to travel restrictions imposed by
the government. Meanwhile, hotel occupancies
in Metro Manila reached 24% in H1 2021 from
20% in H2 2020 due to low foreign arrivals.
Due to global travel restrictions brought about
by Covid, the share of tourism to GDP has
5IKEA officially opens online store in PH; to operate 24/7
6Retail industry pushes back recovery projections;
5
 Hotel occupancy rate and foreign arrivals Share of tourism to GDP across APAC
(2005 – 4M 2021)

Visitor Arrivals (LHS) Average Occupancy (RHS)

THAILAND CHINA

2019 2020 2019 2020

8,000,000 80%
20.1% 8.4% 11.6% 4.5%
70%

6,000,000 60% SINGAPORE JAPAN

2019 2020 2019 2020

50%
11.1% 4.7% 7.1% 4.7%
4,000,000 40%

30% INDONESIA HONG KONG

2,000,000 20% 2019 2020 2019 2020

5.9% 3.2% 12.0% 3.0%

10%
- 0%
4M 2021
2005

2007

2009

2011

2013

2015

2017

2019

Source: World Travel and Tourism Council

Source: Colliers Average daily rates by classification, H2 2020
vs. H1 2021
significantly declined to mostly below 5% in 2020. %
Colliers believes that recovery in the leisure Star
H2 2020 H1 2021 change
sector will likely be anchored by domestic classification
(HOH)
tourism, with the Department of Tourism (DOT)
PHP3,331 PHP3,461
expecting domestic trips to reach 84.8 million in 3-star +3.9%
(USD69) (USD72)
2022 or 90% of the total number of domestic
trips in 2019.7 Colliers believes that the PHP4,802 PHP4,457
4-star -7.1%
Department of Tourism (DOT) will likely continue (USD100) (USD93)
its domestic tourism push by promoting re-
PHP8,878 PHP8,392
opened local destinations in the country. 5-star -5.5%
(USD184) (USD174)
Colliers is optimistic that revenge travel among
Source: Colliers
local travelers should help increase hotel
occupancies of selected hotels across the Colliers also projects Average Daily Rates (ADRs)
country. Meanwhile, the DOT projects foreign to decline by 10% in 2021 before a slow recovery
arrivals reaching between 2 million to 5 million starting 2023 on the back of improved foreign
by 2022. and domestic visitors.

In 2021, about 1,027 rooms are likely to be Industrial: E-commerce to

delivered with the Bay Area accounting for about
81% of the new supply. Colliers believes that the sustain demand
delivery of new hotel rooms is likely to remain
tepid up to 2022 before gradually rebounding in Colliers believes that the growth of industrial
2023. sector beyond 2021 will likely be driven by
Upcoming hotels from 2021 to 2024 sustained demand in e-commerce, logistics and
manufacturing across the country. In H1 2021,
Hotel name Number of rooms we recorded industrial vacancy in the Cavite-
Hotel Okura 191 rooms Laguna-Batangas (CALABA) corridor sliding
Pullman Hotel Manila 200 rooms marginally to 5.6% from 5.7% in H2 2020. This
Ascott DD Meridian Park 389 rooms can be attributed to the increased demand for
Westin Manila Sonata Place 303 rooms warehouse and storage space among e-
Red Planet Fort Bonifacio 245 rooms commerce and FMCG (Fast Moving Consumer
Source: Colliers 7Domestic tourism’s recovery in 2022 at earliest, 2024 at worst.
6
 Goods) firms as online shopping continues to
grow in the country. A survey conducted by
NielsenIQ8 has shown that 67% of Filipinos are
likely to continue online shopping even post-
Covid.
According to the Department of Trade and
Industry’s (DTI) e-commerce roadmap, the sector
is projected to contribute about PHP1.2 trillion
(USD25 billion) by 2022.
We also see the rising demand for cold storage
facilities sustaining demand for industrial assets
in the next 12 to 36 months. The Board of
Investments (BOI) projects the revenue of the
country’s cold chain industry9 to reach PHP20
billion (USD417 million) by 2023. As the
government accelerates its Covid inoculation
program, cold storage facilities are likely to
expand in areas outside Metro Manila, anchored
by the growth of grocery and perishable food
item deliveries. To meet the growing demand, we
encourage developers to consider expanding
their industrial portfolio to include cold chain
facilities or refurbish existing supply by
incorporating specialized cold storage features
such as pre-installed chillers, increased floor load
capacity, and higher ceiling heights.
New industrial stock from 2021 to 2024
upcoming supply, we project vacancy rates to
continue declining as the demand for
warehouses and industrial spaces is likely to
thrive beyond 2022.
Colliers believes that developers can further
capture the rising opportunities in the industrial
sector by refurbishing existing warehouse
facilities. We encourage developers to utilize
advanced-technology such as facility automation,
artificial intelligence (AI) systems, and cloud-
managed IT solutions.
The recently enacted Corporate Recovery and
Tax Incentives for Enterprises Act (CREATE) law
should also help attract more investments into
the country through reduced corporate income
taxes. Industries involved in the manufacturing
of medical equipment and supplies, export
products, and electronic components and
semiconductors are among the sectors likely to
enjoy these tax incentives. Colliers encourages
investors to take advantage of the available
incentives as they plan out their investment in
the Philippines over the next 3 to 5 years.
Land leasehold and warehouse lease rates in
CALABA
100 300
80 250
PHP/sqm

PHP/sqm
200
60
150
40
Tarlac 100
20 50
Crescendo Industrial Park
Filinvest Innovation Park - -
2015

H1 2021
2011
2012
2013
2014

2016
2017
2018
2019
2020

Cavite
Pampanga
Cavite Technopark Phase 2
Pampanga Technopark Sunstrust Ecotown Tanza
Land Leasehold (LHS) Lease Rate SFB (RHS)
Alviera Industrial Park 2 Phase 2 Source: Colliers

Batangas
Colliers observed a YOY increase by 1.9% and
Lima Technology Park Expansion
Sinisian Lemery Batangas Port
0.9% in land leasehold and warehouses lease
Ninoy Aquino
International Airport and Industrial Park rates respectively in H1 2021. We project an
New-First Industrial Township annual average growth of 2.2% for land
First Philippine Industrial Park leaseholds and 2.0% for warehouse lease rates
Source: Colliers from 2021 to 2025. Colliers expects prices to
remain competitive as logistics firms and
We expect supply to increase in 2021 with the warehouse developers explore the construction
completion of expansion projects such as the of new warehouses and upgrading of existing
Lima Technology Park Expansion in Batangas, assets in the next 12 to 24 months.
Cavite Technopark Phase 2, and the Suntrust
Ecotown Tanza Phase 2. Despite the amount of
8Business Mirror, Pinoys seen to still do online shopping post-Covid
9BusinessWorld, BoI sees cold chain industry revenue at P20 billion
by 2023. 7
 For further information, please contact:

Joey Bondoc Richard Raymundo

Associate Director | Research | Managing Director | Philippines
Philippines +63 2 8858 9028
+63 2 8858 9057 Richard.Raymundo@colliers.com
Joey.Bondoc@colliers.com

Martin Aguila
Research Analyst | Research |
Philippines
+63 2 8863 4116
Martin.Aguila@colliers.com

Brent Respicio
Research Analyst | Research |
Philippines
+63 2 8863 4197
Brent.Respicio@colliers.com

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