BOARDWALK Siargao’s world-famous Cloud 9 surfing spot, whose awesome waves can reach as high as 5 to 6 feet, without the crowd at the break of dawn. —Photo by Vanessa B. Hidalgo
The Philippine tourism sector is set to make a strong recovery after enduring significant losses during the COVID-19 outbreak in 2020, which deeply impacted various industries, including real estate. The government expects international tourist arrivals to reach 4.8 million by the end of 2023, a recovery of approximately 58 percent compared to pre-pandemic levels in 2019. This positive trend is evident as visitor numbers reached 2.67 million last month, up from a historic low of 1.48 million in 2020. David Leechiu, CEO of the real estate consultancy firm Leechiu Property Consultants, Inc. (LPC), sees this revival as a positive sign for the local property market. With the full-scale recovery of the tourism industry, Leechiu believes there will be increased employment opportunities and economic activity, leading to a boost in individuals’ financial stability and access to various financial services. This, in turn, will drive increased demand for insurance, bank accounts, credit cards, and home mortgages.
To take advantage of the rebound in tourism, both from international and domestic travelers, developers of leisure estates are increasing their hotel supply. Over the next four years, 68 new hotel properties are expected to open, with 16 percent of them set to launch within the next 12 months. These developments will add a total of 15,928 guest keys to the local hospitality space, according to LPC. This surge in hotel construction reflects a collective commitment to the government’s target of attracting 12 million foreign tourists by 2028. Moreover, the increasing availability of high-speed internet has made beachfront properties more valuable, as it allows outdoor enthusiasts to work remotely from anywhere. In Siargao, a popular surfing and beach-hopping destination, land values for beachfront properties have reached as high as P50,000 per square meter, while nonseaside lots range from P2,000 to P20,000 per square meter.
Despite the recent setback in the government’s tourism campaign, Leechiu believes it will have no lasting negative impact on the country’s tourism sector, apart from the waste of public funds. He points out that many individuals are promoting the Philippines on platforms like YouTube and Instagram, providing authentic and credible experiences of the country. Leechiu believes that tourism, with its significant multiplier effect, has the potential to become a new economic driver for the Philippines, similar to the contributions of the business process outsourcing and labor exporting industries.
The overall Philippine property market is faring well in the post-pandemic economic reopening. The office market has recorded a 46 percent increase in tenant demand, with 540,000 square meters leased in the first half of 2023 compared to the same period last year. Additionally, Philippine Offshore Gaming Operators (Pogos) have started acquiring office space again after a hiatus due to the pandemic. In the first half of the year alone, Pogos secured 88,000 square meters, surpassing the total acquired in the past three years. Leechiu emphasizes the importance of Pogos in the economy, highlighting the benefits they bring and stating that the government should focus on implementing regulations rather than phasing out the sector.
In the residential market, Metro Manila has seen an 8 percent growth in the number of condominium launches in the second quarter, indicating an optimistic outlook among developers. However, condominium presales have declined by 27 percent, attributed to stricter buyer screening and tighter credit standards. Only 8,741 units were taken up by the residential market in the second quarter through preselling. The demand for industrial space has also rebounded, particularly in the food sector, which accounts for over a third of tracked demand. Warehouse stock has consistently grown in the last decade, with a compounded annual growth rate of 14 percent.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.