What is driving the demand for real estate in the Philippines?

There are several reasons why the real estate market continues to grow in the Philippines. Having one of the fastest-growing economies in Asia, I’ve listed some of the main drivers below.

1. Business Process Outsourcing

The Business Process Outsourcing (BPO) industry is one of the main drivers of the economy in the Philippines. Thanks to its young and English-speaking talent pool, increasingly more foreign companies turn to the Philippines when looking for outsourcing options.

The industry is predicted to double by 2020 and has grown exponentially. Firms from particularly the US, the UK, and Australia invest heavily in this industry.

2. Continuous Supply of Flexible Workspace

The flexible workspace industry is here to stay and will grow tremendously in the Philippines and other Asian countries in the coming decade. It’s said that 30% of all office space will be flexible work-space by 2030.

Colliers believes that the flexible workspace area will expand by 10% at a minimum in the coming three years. Co-working spaces will not only cater to small companies and digital nomads, but also to multinational and outsourcing companies that look for flexibility.

3. Increased Amount of Chinese Buyers

An increased number of Chinese buyers contributes to current and future growth. According to Bloomberg, the gambling/gaming market has attracted around 100,000 Chinese workers to the Metro Manila area since September 2016.

4. High Remittances from Overseas Filipinos

The Philippines is the third-largest recipient of foreign remittances in the world. Overseas Filipinos sent additionally USD 3 billion to their families in 2017 compared to 2016.

With a depreciating peso, and with the increase in foreign remittance, many families now have the purchasing power to buy and invest in the residential property market.

Summary

The Philippines’ real estate market has suffered hard in 2020 due to the COVID-19 pandemic and will most likely be in recovery mode in 2021.

While prices have dropped by double digits, we also see reduced lease rates and take-up rates. Tens of thousands of jobless overseas-working Filipinos have turned back to the country, which puts further pressure on the economy.

Hopefully, the market will recover the earliest possible once the country opens its borders. In fact, the country has seen impressive growth in the past years.

The key drivers are: Business Process Outsourcing (BPO) from multinational companies, demand from Chinese investors and other foreigners, increased purchasing power among locals, increasingly more remittances from overseas, and flourishing gaming industry.

Source:

https://www.asiapropertyhq.com/philippines-real-estate-market/#:~:text=The%20residential%20property%20market%20was,continued%20to%20rise%20before%202019.&text=From%202019%20to%202021%2C%20Colliers,33%25%20increase%20compared%20to%202017.