PRESIDENT Ferdinand R. Marcos, Jr.’s third State of the Nation Address (SONA) highlighted crucial issues that will have a direct or peripheral impact on Philippine property. From the improvement of the country’s infrastructure network to the upskilling of potential workforce, Colliers believes that these pro-business reforms will play a pivotal role in resuscitating Philippine property post-pandemic. While challenges remain, including business registration bottlenecks, President Marcos’ last SONA infuses much-needed optimism, particularly in stoking the property segment, which is being positioned as one of the key job and livelihood-generating sectors of the Philippine economy. Tourism was also highlighted, which has great potential to employ Filipinos living in the countryside. What’s encouraging is that the president also addressed the country’s costly electricity and measures that can be implemented to plug power shortages. This should play a key role in revivifying the Philippines’ manufacturing competitiveness, which should enable the country to attract much-needed foreign direct investments.
IMPROVEMENT OF PHYSICAL AND DIGITAL INFRASTRUCTUREPresident Marcos committed to infrastructure development that is ‘sustained, strategic, and on schedule.’ We expect the president to continue allotting 5% to 6% of the country’s GDP to infrastructure. Previously, he ordered ‘full speed ahead’ to amplify his administration’s goal of ramping up and hastening infrastructure implementation across the country. This is basically a continuation of the level of spending implemented under the previous administration. The strategy is definitely not just Metro Manila-centric. Based on the projects mentioned by the president, among the provinces likely to benefit from this infrastructure program are Bulacan, Cavite, Laguna, Batangas, Pampanga, Zamboanga, Lanao del Norte, and Misamis Occidental.
Colliers previously highlighted the importance of infrastructure projects in raising the attractiveness of office and residential projects, especially outside Metro Manila. This is likely to be supported by decentralization, which the president previously stressed. We also highlighted the importance of infrastructure in raising land and property values as they improve people’s mobility. We believe that this infrastructure blueprint will play a crucial role in guiding developers’ landbanking and expansion plans. Hence, developers should be on the lookout for the progress of these projects.
UPSKILLING OF FILIPINO STUDENTSThe president emphasized the need to focus on technical-vocational education and training (TVET). This is important in ensuring that the Filipino workforce is globally competitive. The Department of Education, Commission on Higher Education, Department of Labor and Employment, and Technical Education and Skills Development Authority have incorporated TVET into the Senior High School curriculum to further boost the employability rate of students. This should be complemented by the president’s earlier push to use English as our medium of instruction. In our view, these are important in retaining our edge in the outsourcing sector, especially for higher value services or Knowledge Process Outsourcing. This should also support the government’s goal of attracting more BPO investments and generating more employment opportunities. More BPO investments could potentially raise the demand for office space in Metro Manila and other key urban areas such as Cebu, Iloilo, Bacolod, Davao, and Clark in Pampanga.
The new Education Secretary should ensure the implementation of a curriculum that will help bridge job mismatch and ensure that college graduates are equipped with skills that will make them employable after graduation.
MULTI-FACETED STRATEGY IN PROMOTING TOURISMPresident Marcos highlighted the important role that tourism plays in generating jobs, especially in the countryside. He stressed the need to improve roads and international airports to enable the Philippines to accommodate more tourists. In 2023, the tourism sector contributed about 8.6% to the country’s GDP, lower than the pre-pandemic level of 12.8% in 2019 — the year when the Philippines attracted the most number of foreign tourists at about 8.2 million. Colliers believes that the gradual recovery of tourism augurs well for the country’s economy, including property players that have established their own leisure-related businesses. In our view, the modernization of airports and development of access roads should guide developers that are planning to build hotels and Meetings, Incentives, Conferences, and Exhibitions facilities outside the capital region. The improvement of infrastructure should also boost the Philippines’ international travel and tourism competitiveness, and this should entice more foreign investors to invest in the country’s leisure sector.
CONTINUED SUPPORT FOR OFWSPresident Marcos also highlighted his administration’s programs for Filipinos working abroad. During his SONA, he mentioned that partnerships with like-minded states have resulted in increased investments and strengthened national security, but also quality jobs for Filipinos seeking employment overseas. This should support the continued deployment of migrant workers and sustain the inflow of remittances.
Colliers sees the growth in remittances partly supporting the demand for horizontal units, particularly projects that are within the affordable to mid-income (P2.5 million to P7 million) price segments, and projects located within the Central Luzon and Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon) regions, which accounted for about 29% of deployed overseas Filipino workers (OFWs) in 2022. We have observed sustained take-up for house-and-lot and lot-only units in provinces including Pampanga, Bulacan, Cavite, Laguna, and Batangas.
EASE OF DOING BUSINESS AND ADDRESSING COSTLY AND INSUFFICIENT POWERPresident Marcos highlighted that the government’s efforts to improve the ease of doing business through the digitalization, integration, and streamlining of government services have produced ‘multiplier effects’. The government has also set in place policies and programs to create a conducive business environment through reforms in the capital markets and the implementation of ‘green lanes’. These measures should enable the country to attract greater interest from foreign firms, including manufacturers that take up space and warehouses in industrial parks.
We recommend that developers highlight the advantages of locating within an industrial park to potential locators. Industrial parks are flexible or easily reconfigured and have zoning regulations tailored for industrial uses. They also have modern infrastructure design such as well-maintained road networks. Locating in an industrial park could also be more cost-efficient as utilities, including water and electricity, are managed systematically.
According to the Department of Energy, electricity rates in the Philippines continue to be some of the most expensive in Southeast Asia. In our view, this will likely be a challenge, especially in attracting locators from power-intensive industries such as data centers.
BANNING OF POGOSPresident Marcos has ordered the banning of POGOs. This created a lot of noise, especially in the property market, given that some developers aggressively chased the additional demand from this sector from 2017 to 2019. As my colleagues from Colliers Philippines’ Office Services-Tenant Representation team highlighted through their latest release ‘PBBM bans all Philippine Offshore Gaming Operators’, the share of office space occupied by the POGO sector has been dwindling. At the peak of POGO demand in 2019, these offshore gaming firms from China occupied about a tenth of the total leasable office space in Metro Manila. This is down to only about 3.5% as of this writing. The latest office deals from POGOs have been ‘sporadic’ at best. It appears that the POGO sector is no longer a major player in terms of office space take-up in Metro Manila, with the latest Colliers Philippines commentary stressing that future absorption will likely come from IT-BPM firms, MNCs, and traditional occupants including government agencies.
Joey Roi Bondoc is the director and head of Research of Colliers Philippines.
