Outlook 2023 Philippines

PHILIPPINES

KEY MESSAGES BRISBANE MANIL

SUPPLY

DEMAND

RENTS

KEY OUTLOOK

 An average of 191,000 sqm of new supply is expected in the next five years, significantly lower than the 709,000 sqm average in the last five (5) years prior to the pandemic. There is, however, no known

 After registering negative net absorption of 69,000 sqm. in 2020, demand is expected to return to positive territory.  Average net absorption from 2023 to 2026 is 470,000 sqm, 30% lower than the average net absorption of 676,000 sqm from 2015 to 2019.

 Rents are expected to grow by 0.4% year-on-year by the end of 2022, the first positive YoY growth figure since Q1 2021. From there, rents are expected to grow on average by 2.3% per year up to 2027.

 New entrants from the IT-BPM sector are expected to flock into the country in 2023. This

includes prospects that Cushman & Wakefield is already talking to at the moment, with take-up expected mid-2023.

projects scheduled for completion for 2027.

MANILA

NEW SUPPLY

NEW SUPPLY (SQM)

700,000

 A total of 337,000 sqm is expected in Q4 2022, though some of this may not reach completion until 2023.  Some developers have updated the expected completion dates for office projects launched prior to the pandemic, while some others have postponed projects indefinitely.

FORECAST

600,000

500,000

400,000

300,000

200,000

100,000

0

2020

2021

2022F

2023F

2024F

2025F

2026F

Source: Cushman & Wakefield

MANILA

DEMAND & VACANCY

NET ABSORPTION (SQM) AND VACANCY RATE (%)

FORECAST

18.0%

600,000

 Manila’s first year of negative net absorption was recorded in 2020. The market rebounded in 2021, albeit with significantly lower levels of demand than pre-pandemic.  In 2022, full-year net absorption is expected to reach 200,000 sqm.  For 2023 to 2026, an average annual net absorption of 470,000 sqm is expected.

16.0%

500,000

14.0%

400,000

12.0%

300,000

10.0%

200,000

8.0%

100,000

6.0%

0

4.0%

-100,000

2.0%

-200,000

0.0%

2020

2021

2022F 2023F 2024F 2025F 2026F Net Absorption Vacancy Rate

Source: Cushman & Wakefield

MANILA

RENT GROWTH

RENT (PHP/SQM/MO) AND RENT GROWTH (% PER ANNUM)

FORECAST

1,160

5.0%

 Rents are expected to show positive year-on-year growth in 2022, after declining in 2021.  From there, rents are expected to grow by approximately 2.3% annually until 2026.

1,140

4.0%

1,120

3.0%

1,100

2.0%

1,080

1.0%

1,060

0.0%

1,040

-1.0%

1,020

-2.0%

1,000

-3.0%

980

-4.0%

2020

2021

2022F 2023F 2024F 2025F 2026F

Rent (PHP/SQM/MO

Rent growth (%)

Source: Cushman & Wakefield

CONTACTS

RESEARCH: Claro Cordero Head of Research, Consulting and Advisory Services Claro.Cordero@cushwake.com LEASING: Tetet Castro

Head of Tenant Advisory Group Tetet.Castro@ap.cushwake.com

Asia Pacific Dr Dominic Brown Head of Insight & Analysis, Asia Pacific dominic.brown@cushwake.com

Disclaimer. The information in this material is general in nature and has been created by Cushman & Wakefield for information purposes only. It is not intended to be a complete description of the markets or developments to which it refers. The material uses information obtained from a variety of sources which Cushman & Wakefield believe to be reliable however, it has not verified all or any information and does not represent, warrant or guarantee its accuracy, adequacy or completeness. Any forecasts or other forward looking statements contained in this material may involve significant elements of subjective judgment and assumptions as to future events which may or may not be correct and are beyond the control of Cushman & Wakefield. Cushman & Wakefield is not responsible for any loss suffered as a result of or in relation to the use of this material. To the extent permitted by law, Cushman & Wakefield excludes any liability, including any liability for negligence, for any loss, including indirect or consequential damages arising from or in relation to the use of this material. All expressions of opinion included in this material are subject to change. © 2022 Cushman & Wakefield. All rights reserved.