Outlook | Manila | 13 December 2022
Aiming for a strong finish
Philippine property recovery spills over into 2023
Insights & recommendations
The Philippine property market is likely to finish 2022 strong backed by improvement in office
deals across the country; higher supply and demand in the Metro Manila pre-selling condominium
market; a rebound in mall consumer traffic; and a rise in hotel occupancies and average daily rates
(ADRs). We see this optimism persisting through 2023 as recovery prospects are boosted by strong
macroeconomic fundamentals.
Office developers should take advantage of a rebound in leasing within and outside Metro Manila
by constructing new office towers and offering more flexible workspaces; residential developers
should launch new projects, integrating sustainable & green features, as the Metro Manila preselling condominium market recovers; while mall operators should brace for more foreign and
local retailers as consumer confidence and foot traffic pick up.
Vacancy
Supply
5.0%
20.5%
603,900 sq m
2.0%
17.1%
5.600 units
2.0%
17%
448,900 sq m
11.2%
6.0%
112 ha
Average Daily
Rate (ADR)
Occupancy
Rate
Supply
USD77
65%
3,900 rooms
Rental Market
Office
Residential
Retail
Industrial
Hotel
Colliers projects positive net take-up in 2023.
We expect net absorption to reach 338,600
sq m, which should be supported by take-up
from outsourcing and traditional* firms.
Colliers expects the delivery of 5,600 new
condominium units in 2023. About twothirds of which will be in the Bay Area.
We see the completion of 448,900 sq m of
new retail space in 2023. We expect rents to
recover following an improvement in retail
space absorption and mall consumer traffic.
Colliers projects the delivery of 112 hectares
of industrial supply in CALABA.1 We see
expanding manufacturing and logistics firms
supporting industrial space absorption.
Colliers sees the opening of more foreignbranded hotels. In our view, the spike in
local and foreign tourists will likely result in
improved occupancies and ADRs.
Source: Colliers. Note: USD1 to PHP59 as of the end of Q3 2022. 1 sq m = 10.76 sq ft. *Traditional occupiers include companies in various sectors
such as legal, engineering & construction, government agencies and flexible workspace operators. Industrial rental market refers to lease rates for
Standard Factory Buildings (SFB) in CALABA. † MICE = Meetings, Incentives, Conferences and Exhibitions; 1 CALABA – Cavite-Laguna-Batangas.
1
“Philippine property is undeniably on its way to
recovery. Lessons from Covid disruptions should
propel the market to greater heights. Now is the
right time to focus on innovation and
differentiation-led recovery strategies especially
as developers and investors continue to face a
precarious global economic and political
environment.”
Joey Roi Bondoc
Associate Director, Research
Office: Positive net take-up as
transactions further rise
2022F
Fort Bonifacio
2,424,500
47K 85K
Ortigas Center
2,075,500
144K
Quezon City
1,533,200
50K
Bay Area
1,157,700
161K
Alabang
788,400
78K
Makati Fringe
569,800
142K
Ortigas Fringe
606,400
22K 90K
Others
395,400
66K
Metro Manila
12,942,200
1,100,000
18.0%
13.0%
600,000
8.0%
100,000
3.0%
-400,000
-2.0%
Laguna
4%
Cebu
Dumaguete
44%
3%
Metro Manila supply forecast per submarket
74K
23.0%
14%
Colliers is starting to see rents stabilizing in
submarkets with declining vacancies such as Fort
Bonifacio and Makati CBD. Meanwhile,
submarkets with significant amount of new
supply and muted take-up are likely to see a
further decline in rents in the next 12 months.
End 2021
Vacancy Rate (RHS)
1,600,000
Pampanga
Average office rents in Metro Manila have
dropped by 35% since 2020. In our view, rents
are likely to decline by another 10% in 2022
before bottoming out in 2023.
3,391,200
Net Take Up
Share of each province to total provincial
office transactions, 9M 2022
In 2023, we see net take-up improving to 338,600
sq metres (3.6 million sq feet). However, we
expect vacancy to rise to about 20.5% as we
project the delivery of 603,900 sq metres (6.5
million sq feet) of new supply. Vacancy in Metro
Manila will remain supply-driven.
Submarket
Supply
Source: Colliers
Colliers sees positive net take-up by the end of
2022. We forecast net absorption to reach
140,000 sq metres (1.5 million sq feet), a
turnaround after negative net absorption
(−181,300 sq metres, −1.9 million sq feet) in 2020
and (−273,100 sq metres, − 2.9 million sq feet) in
2021). We adjusted our forecast to a 19.5%
vacancy in 2022 from our initial estimate of
18.2% due to muted pre-leasing in upcoming
buildings.
Makati CBD
Metro Manila supply, demand and vacancy
forecast (in sqm)
Others
Davao
7%
28%
496K sqm
Total
provincial
transactions,
9M 2022
145K sqm
Source: Colliers
Colliers recommends that occupiers take
advantage of the market conditions by
implementing flight-to-quality measures as well
as securing early renewals in business districts
such as Ortigas CBD, Fort Bonifacio and Bay Area
where quality new supply is available. From 2023
to 2026, we see the annual delivery of about
545,700 sq metres (5.9 million sq feet) of new
office space. Landlords should continue
providing concessions (e.g. delayed escalations,
extended fit-out) to attract new occupants and
retain existing ones amid the completion of
more options in the market.
2024F
2023F
2025F
2026F
End 2026F
3,505,000
39K
193K
25K
129K
162K
58K
2,460,900
54K
279K
44K 26K
114K
2,816,900
42K
2,195,400
172K
1,519,500
17K
882,800
16K
77K
871,800
84K
803,900
33K 53K
107K
783,900
Metro Manila
transactions,
9M 2022
163K
603,900
60K
852,400
61K
570,100
510,900
498,000
15,909,000
Source: Colliers ; Note: in sqm
2
Colliers is optimistic of greater office space
absorption in the provinces as occupiers revisit
their business continuity plans (BCP) and expand
operations by tapping provincial talent.
Developers are keen on capturing this demand
outside the capital region by building more office
towers. Among key areas with substantial new
supply up to 2024 include Cebu, Bacolod, Iloilo,
and Davao.
Office market overview (H1 2022)
Bacolod
Vacancy
22.5%
10,000
Ave. new supply
(2022-2024)
23,200
sqm
5,000
81,800
sqm
Source: Colliers
Note: Vacancy figures are as of Q2 2022
357,800
sqm
Vacancy
14.1%
Ave. new supply (20222024)
6,100
sqm
Residential: More integrated
communities and sustainable
features
We expect vacancy in the secondary market to
drop to 17.1% in 2023 from 17.6% in 2022.
Residential leasing should be supported by
demand from expatriates and local employees
looking for condominium units near their
workplaces.
Residential vacancy (2016 – 2023F)
20.0%
2020: 15.6%
15.0%
2023F: 17.1%
10.0%
Colliers sees an annual average completion of
8,100 units from 2022 to 2024, from the 7,800
units completed yearly from 2019 to 2021.
2016
0.0%
Source: Colliers
Metro Manila residential stock forecast, end of 2021 and 2024 (units)
End of 2021 End of 2024 % Change
1
Bay Area
2 Alabang
3
Fort Bonifacio
30,260
44,140
45.9%
4,880
6,370
30.5%
40,320
43,840
8.7%
Rockwell Center
5,270
5,830
10.6%
Ortigas Center
18,730
21,760
5 Makati CBD
16.1%
28,550
29,680
4.0%
6 Araneta City
4,550
5,140
13.0%
7 Others
9,630
9,630
0.0%
142,190
166,390
17.0%
4
Total
Covid-19
2019: 11.0%
5.0%
Note: Google Maps estimated private vehicle travel time to Makati: Bay Area-17 min, Alabang-24 min, Fort
Bonifacio-14 min, Rockwell Center-9 min, Ortigas Center-15 min, Araneta Center-23 min
2023F
Davao
2024F
Ave. new supply
(2022-2024)
Source: Colliers
2023F
27.7%
2022F
Vacancy
2021
1.3Mn
sqm
2020
Total stock
Total stock
8.5 K
2022F
38,200
sqm
3.4 K
2021
Ave. new supply
(2022-2024)
7.7%
10.1 K
5.6 K
2020
Vacancy
8.7 K
0
Cebu
189,800
sqm
4.4 K
2019
Total stock
11.2 K
2019
Iloilo
11.7 K
2018
668,900
sqm
15.9 K
2018
17.7%
Ave. new supply
(2022-2024)
15,000
Total stock
2017
Vacancy
13.4Mn
sqm
20,000
155,300
sqm
2016
Total stock
Historical condominium completions
(2016 – 2024F)
2017
Metro Manila
By the end of 2024, we project condominium
stock in major business districts in Metro Manila
to reach 166,400 units, a 17% increase from
142,200 units in 2021. The Bay Area will likely
overtake Fort Bonifacio as the biggest
condominium market in the capital region in
2024, with 44,100 units or 27% of stock during
the period.
7
4
5
6
1
3
2
Source: Colliers
3
Meanwhile, Colliers saw a pick-up in demand in
the pre-selling condominium market in Metro
Manila. As of 9M 2022, about 14,900 units were
sold in the capital region, already outpacing fullyear 2021 figures of 12,400 units.
While the mid-income market (PHP3.2 million to
PHP6.0 million or USD54,200 to USD101,700)
continued to dominate total take-up, we
observed an increased demand for luxury
projects (PHP8 million and above or USD135,600
and above). The segment accounted for about
28% of total take-up in 9M 2022, up from −1.6%*
in 9M 2021. In our view, this market will remain
resilient amid the rising interest and mortgage
rates. Colliers believes that demand for luxury
and ultra-luxury projects will likely be sustained
as investors bank on these properties’ potential
for capital appreciation.
Breakdown of take-up, 9M 2021 vs. 9M 2022
Economic
Affordable
Mid-income
Upscale
Luxury
28%
80%
48%
11%
35%
30%
40%
-0.4%
-20%
7%
9M 2021
26%
-2%
-0.1%
9M 2022
Source: Colliers
We also recommend that developers highlight
amenities such as open spaces and green areas.
Based on our Q3 2022 Residential Survey, about
90% of respondents believe that having green
and sustainable features are important in
purchasing a residential unit. Moving forward,
Colliers sees more developers securing green
building certifications for their residential
towers.3 We believe that this will play a crucial
role in future-proofing residential projects.
How important are green and sustainable features
when purchasing a residential development?
17%
Critical,
must be present
40% Important,
a decision factor
41% Nice to have,
Not a
Unimportant,
requirement
3%
not a factor
Colliers also encourages developers to assess
the viability of launching more master-planned
communities to take advantage of the
government’s infrastructure projects. In the next
12 to 36 months, we see the completion of bigticket projects including MRT-7, LRT-1 Cavite
Extension, North-South Commuter Railway and
Cavite-Laguna Expressway (CALAX) raising the
attractiveness of key provinces in Central and
Southern Luzon for more township
developments.
Demand drivers for integrated communities
Improving infrastructure
Popularity of live-work-play lifestyle
End-users seeking convenience
Source: Colliers
Retail: Revenge spending to
extend into 2023
Major mall developers have been reporting that
consumer traffic has now reached between 85%95% of pre-Covid levels in Q3 2022 from only
40% a year ago. In 2023, we see more retailers
(foreign and local) taking up physical mall space
to take advantage of rising consumer traffic and
anticipated increase in purchasing power.
In 2022, several foreign retailers opened shop
across malls in Metro Manila. These include The
Editor’s Market and Panda Express in SM Mall of
Asia, Randy’s Donuts in Robinsons Magnolia, Clé
de Peau Beauté in Greenbelt 5, 6ixty8ight in SM
City Grand Central and Drunk Elephant in SM
Makati.
Metro Manila retail rents forecast (2012-2023F)
10%
5%
1%
0%
-5%
-5%
-10%
-10%
-15%
Rental Growth (LHS)
Source: Colliers Q3 2022 Residential Survey
*Negative percentage denotes that back-outs are higher than take-up
during the period. 3DMCI Homes to develop upscale condo in Makati;
Filigree launches Two Botanika project.
2%
20.0%
10.0%
0.0%
-10.0%
-20.0%
-30.0%
-40.0%
Consumer Confidence (RHS)
Source: Colliers
4
Colliers sees the approval of the amendments to
the Retail Trade Liberalization Act (RTLA) paving
the way for the entry more foreign retailers in
the country. Based on our mall scans, the Food
and Beverage (F&B) segment will account for
50% of the upcoming retailers followed by
fashion accessories and beauty & health at 27%.
they welcome more consumers back to their
properties. From 2024 to 2026, Colliers sees the
completion of 62,000 sq metres (667,100 sq feet)
of new retail space annually, only a fifth of the
annual delivery of 327,200 sq metres (3.5 million
sq feet) of new supply that we recorded from
2017 to 2019.
Colliers recommends that mall operators
reactivate their event spaces or activity centres
by organizing events such as trade fairs, exhibits
and concerts to attract more mallgoers. F&B and
clothing & footwear retailers should also
consider opening pop-up stores especially those
testing the feasibility of the Philippine retail
market. We also encourage mall operators and
retailers to continue implementing regular
sanitation and other health and safety protocols
especially in high-density retail spaces.
Colliers believes that online shopping will remain
popular as Filipinos continue to put a premium
on convenience. In our view, this will likely
complement brick-and-mortar shopping which
we see receiving a boost from the dropping of
mask mandates. Colliers encourages mall
operators and retailers to further strengthen
their omni channel strategies to support brickand-click shopping.
Metro Manila Retail supply and vacancy
forecast, (2012–2023F)
Share of upcoming retailers in Metro Manila
4%
4%
3%
3%
New Supply
Vacancy at Year-End (RHS)
20.0%
2%
400,000
6%
10%
50%
10.0%
200,000
17%
Source: Colliers
In 2023, we see vacancy marginally rising to 17%
from a projected 16% vacancy in 2022 due to the
substantial delivery of 448,900 sq metres (4.8
million sq feet) of new supply. Despite recordhigh new supply, we expect greater retail space
absorption from brick-and-mortar shops
following the improved consumer traffic as
reported by mall operators and consumer
confidence from the Philippine central bank.
Meanwhile, Fitch Solutions projects household
consumption to grow at an average of 5.1%
annually from 2023 to 2026. Fitch Solutions also
expects household incomes to outperform
inflation in 2023, "which will ensure real income
growth and greater potential for consumer
spending.“4
Colliers encourages developers to reassess the
ideal sizes of upcoming retail developments as
4Philippines 2023
Consumer Outlook: Easing Inflation Will Prop Up
Robust Growth In The Philippines (fitchsolutions.com)
2023F
2022F
2021
2020
2019
2018
2017
Home
Culture / Art / Entertainment
2016
Others
Services
0.0%
2015
Fashion
-
2014
Hobby /Gifts / Specialty Ref.
2013
Fashion Accessories
Beauty/Health/Accessories
2012
Food & Beverage
Source: Colliers
Leisure: Domestic tourists to
jumpstart recovery, more
foreign brands to enter PH
Data from the Department of Tourism (DOT)
show that foreign arrivals as of November 14,
2022, reached 2.0 million, already exceeding the
full year target of 1.7 million arrivals. The United
States, South Korea and Australia were the top
source markets during the period. Meanwhile,
hotel occupancies in the capital region as of H1
2022 reached 47% from 44% in H2 2021 as we
saw the return of business travel and
resumption of MICE activities.
The DOT also reported that visitor arrivals from
February to September 2022 generated
PHP100.7 billion (USD1.7 billion) in visitor
spending, higher than the PHP4.94 billion
(USD8.4 million) a year ago.5
5PIA
- PHL visitor arrivals reach 2M; tourism revenue hit 100B – DOT
Chief
5
Metro Manila hotel new supply and forecast
(2017 – 2024F)
Hotel occupancy rate and foreign arrivals
(2012-2022F)
Visitor Arrivals (LHS)
Average Occupancy (RHS)
10M
100%
5M
50%
0M
0%
4,000
2022F*
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
3,000
Source: Colliers; Department of Tourism
Note: Arrivals are as of 10M 2022
Meanwhile, data from the Philippine Statistics
Authority (PSA) show that the tourism sector’s
share to the country’s economy reached 5.2% in
2021 from 5.1% in 2020. Domestic tourism
expenditures also reached PHP783 billion
(USD13.2 billion), up 39% YOY after reporting
37.3 million trips in 2021 (from 27 million in
2020). DOT is optimistic that the removal of mask
mandates will likely lure more travelers to visit
the country. In our view, this is likely to stoke
demand for hotels across the country and help
raise occupancies. However, the Philippine Hotel
Owners Association (PHOA) is “cautiously
optimistic” in 2023 as rising inflation, airfares as
well as global geopolitical tensions are likely to
affect customers’ travel decisions. 6
In 2023, Colliers projects the completion of 3,900
rooms, a record-high as developers anticipate
the projected recovery in global travel. From
2023 to 2025, Colliers expects the annual
delivery of 2,120 rooms, higher than the 720
rooms completed yearly from 2020 to 2022. We
expect more foreign-branded hotels opening in
the next 12 to 36 months. From 2023 to 2025,
about 44% of the new supply are foreign brands
and are likely to open in the Bay Area, Makati
CBD and Ortigas CBD.
What will drive the demand for foreignbranded hotels
Recovery in foreign and local tourists
More modern airports
Growing propensity to spend on leisure
6Hotels
plans
balancing value, affordability as inflation weighs on travel
2,000
1,000
0
2017 2018 2019 2020 2021 2022 2023 2024
Source: Colliers
Selected upcoming hotels from 2023 to 2025
• Westin Manila
Sonata Palace
Hotel
Quezon City
Ortigas CBD
Makati CBD
• Seda Bay Area
• Ascott DD Meridian
Park
• Grand Westside
Hotel
• Solaire North
• Ibis Styles Hotel
• Mandarin
Oriental
• Seda One Ayala
Bay Area
Fort Bonifacio
• Red Planet The
Fort
• Hotel 101 Fort
Source: Colliers
Colliers sees Average Daily Rates (ADRs) rising by
about 15% in 2022 after recording a cumulative
drop of 20% in 2020 and 2021. ADRs are likely to
continue to improve in 2023 following the
projected rise in local and foreign tourists.
The ADRs of selected high-end resorts have
either held firm or increased HOH. Colliers
attributes this to continued revenge travel across
the country. In our view, the increase in rates is
likely to be sustained as the country attracts
more international travelers, especially the longhaul and high-spending ones.
High-end resorts daily rates
Hotel Name
Amanpulo Resort
Crimson Hotel
Boracay
Shangri-la
Boracay
Shangri-la Mactan
H1 2022
H2 2022
USD1,430
USD1,500
PHP10,200
PHP10,350
PHP22,325
PHP22,325
PHP12,600
PHP13,500
Note: USD1 = PHP59 as of the end of Q3 2022 ; USD1 =
PHP54 as of the end of Q2 2022
6
Industrial: New industrial
parks and facilities to support
manufacturing’s revival
The industrial sector is likely to benefit from the
Marcos Administration’s push for
industrialization. Prioritizing job-generating
manufacturing activities was among thencandidate Ferdinand Marcos Jr.’s priorities.7
Colliers believes that improving manufacturing
competitiveness should result in greater inflow
of investments and these should benefit
industrial parks, especially those located in
northern and central Luzon.
In June 2022, the Department of Trade and
Industry (DTI) highlighted that it is expecting
more than PHP500 billion (USD8.4 billion) worth
of investments in the Philippines in the next 18
months. According to DTI, the manufacturing
sector will likely be a major recipient of these
pledges.8 Colliers believes that this will play a
vital role in industrial space absorption once
these investments materialize.
Select industries that will likely receive
investment pledges in 2023
Electronics
manufacturing
Logistics
Automotive parts
manufacturing
Data centers
Marine shipbuilding
and repair
IT-BPM
Battery technology
Agribusiness projects
Source: Department of Trade and Industry
We also see the cold chain sector sustaining
demand for industrial and warehouse assets,
especially with the growing preference for online
groceries and same-day deliveries. Recently, the
German-Philippine Chamber of Commerce and
Industry (GPCCI) disclosed that there are seven
German companies which are seeking local
partners in the cold chain industry.9 The Board of
Investments (BOI) aims to increase cold storage
capacity in the country to 650,000 pallets by
2023 from 500,000 pallets in 2020.10
7Marcos
bats for industrialization to create more jobs; 8Over P500-B
investment pledges expected in next 18 months — DTI’s Lopez;
9German firms seek partners in cold chain industry; 10BoI compiling
database on cold chain facilities
In our view, data centers are potential industrial
locators beyond 2022. Industrial parks are ideal
locations for data centers because of their power
capacity that can support data centers’ electricity
requirements. Developers should be proactive in
cornering the demand from data centers by
highlighting features of industrial parks such as
the potential for customization and subsidized
utility costs. Upcoming data centers located
inside industrial parks include YCO Cloud
Centers in Light Industry and Science Park 4 in
Batangas and Dito Telecommunity in Clark Global
City in Pampanga.
Top industries that will drive demand for data
centers
Cloud
computing
Telecom
E-commerce
Government
Banking and
finance
Hospitals
Source: Colliers
Industrial parks in Central Luzon will likely
remain as popular alternative options to CALABA
(Cavite-Laguna-Batangas). From 2023 to 2024,
we see the delivery of 210 hectares (520 acres) of
new industrial space particularly in Tarlac and
Subic. DTI is currently pitching Central Luzon as a
manufacturing and logistics hub, highlighting
growth opportunities in Pampanga’s New Clark
City, Bataan’s Freeport Area, and Tarlac’s Luisita
Industrial Park.11 Singaporean firms are also
keen on investing in the Filinvest Innovation Park
in New Clark City.12
New industrial supply from 2023 to 2024
Tarlac
Crescendo Industrial Park
Filinvest Innovation Park –
Phase 2
Subic
Tipo Hightech Eco Park Subic –
Phase 2
Batangas
Ninoy Aquino
International Airport
Lima Technology Park Expansion
Batangas Technopark
Source: Colliers
11Central
Luzon pitched as manufacturing, logistics hub; 12FLI woos
Singaporean firms
7
For further information, please contact:
Joey Bondoc
Associate Director | Research |
Philippines
+63 2 8858 9057
Joey.Bondoc@colliers.com
Richard Raymundo
Managing Director | Philippines
+63 2 8858 9028
Richard.Raymundo@colliers.com
Martin Aguila
Senior 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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