While there is general apprehension over the impact on the local economy by the Trump 2.0 presidency due to the incoming US Chief Executive’s protectionist stance, property consultant Santos Knight Frank (SKF) is taking a more upbeat view over the prospects of the real estate industry.
In a media briefing, SKF Chairman and CEO Rick Santos said US President-elect Donald Trump is actually one of the “better persons to help the Philippine real estate sector and business in the Philippines.”
“He is a businessman, a serious businessman. He's very much into real estate. He mentioned in his inaugural talk that he believes in the special relationship with the Philippines as a partner ally, as a treaty ally. So I think it's going to be positive for the relationship. I see very much upside. I see limited downside. So there's always good, there's always bad, but I'm very optimistic,” he noted.
Santos added “I couldn't think of a better person to help the Philippine real estate sector and business in the Philippines. He is probably one of the most high-profile real estate individuals and personalities anywhere, so we're optimistic.”
Other factors that could boost the prospects of the Philippine real estate sector is the country’s young population and a resilient overseas remittance sector.
“Having a skilled workforce, having a globally competitive workforce is absolutely crucial. So I would see anticipate those that those remittances will still continue to grow, and that BPO sector revenue will also continue to grow,” he said.
Thus, SKF said the office sector is expected to continue its rebound trajectory in 2025 as tenants express optimism regarding their office expansion and right-sizing plans over the coming years.
SKF’s recent occupier sentiment survey, The Collab, revealed that 64 percent of companies surveyed see potential expansion in their office footprint in the next three to five years. One in every three indicated choosing Metro Manila as their preferred location for growth.
Overall, the commercial real estate sector has been thriving in 2024, fueled by outsourcing expansion and leasing activity. Despite limited supply in high-end and prime real estate, the sector continues to show stability and growth amid evolving market challenges.
“The Philippine real estate sector is riding on a wave of opportunities driven by proactive measures from the current administration to open the country further to investments. These efforts are creating a more dynamic and business-friendly environment, paving the way for sustained development and progress,” said Santos.
He added that “momentum in the market remains strong, particularly in the residential segment, where Manila has once again secured the top spot in Knight Frank’s Prime Global Cities Index. Demand continues to drive price growth in this sector, fueled by limited supply.”
“At the same time, the preference for green-certified buildings is on the rise, signaling a shift among occupiers toward highly efficient, sustainable, and cost-saving grade-A buildings," he said.
“This year, we saw a five percent increase in green-building take-up, equivalent to gross leasable area. The shift from traditional to green-certified spaces can also imply their real estate strategy in their flight to quality,” Santos also noted.
Meanwhile, he said the Marcos administration's CREATE MORE Act "promotes investment-friendly policies designed to stimulate business growth and demand for real estate. With these reforms, Manila presents a prime opportunity for investors to capitalize on its expanding commercial and industrial sectors.”
Despite the Philippine government issued an executive order to cease operations of Philippine Offshore Gaming Operators (POGOs), the Bay Area, a hub for POGO-related office space, demonstrated resilience with vacancy rates down by 7.2 percent compared to 2023.
Metro Manila continues to assert its position as a leading destination for business process outsourcing (BPO) companies, ranking as the third most affordable city in Asia Pacific for occupancy costs, according to Knight Frank’s Q3 2024 Office Highlights report.
Among Metro Manila’s prominent CBD areas, Taguig remains the preferred office choice, with a vacancy rate of 12.4 percent lower by two basis points compared to first half of 2024.
Additionally, green-certified buildings continue to see strong demand, with an average take-up of 87.27 percent compared to 82.39 percent from traditional office spaces, most notably in Makati and BGC.
This reflects occupiers’ growing preference for sustainable developments, even while commanding higher rates. Tenants increasingly recognize the benefits of reduced operational costs, improved employee well-being, and an enhanced corporate image, as highlighted in Santos Knight Frank’s The Collab Special Report.
The report additionally showed that adopting a more collaborative work design is the top choice among Philippine-based office locators who plan to make changes to their office layout and design at 95 percent.
Further findings from The Collab Special Report reveal that 33 percent of occupiers still prefer Metro Manila as their primary location.
As predicted even before the pandemic, emerging cities such as Metro Cebu, Iloilo, Bacolod, and Metro Clark are also gaining traction, offering alternative locations for businesses looking to expand outside the capital.
This shift highlights the evolving preferences of tenants seeking opportunities across the country while maintaining Metro Manila as the primary hub of the office market.