“Are we in a recession?”
During a recently held webinar in which I had the opportunity to be one of the speakers the title itself already contained an excruciating question: “Are we in a recession?” This question was actually answered by our BSP chief, Benjamin Diokno, who, in an interview published by the Inquirer on April 26 2020 predicts a recession of the Philippine economy for 2020 with a U shaped recovery by end of the year and a full recovery in 2021.
Diokno fortunately also noted that the peso remains steady despite the market turmoil, and has been the second strongest currency, after the Japanese yen, among 14 monitored Asian foreign currencies after the COVID-19 outbreak. So where are we currently heading? Is this going to impact all sectors across the board? I tried to ask the difficult questions but apparently nobody really wanted to answer them. Resilient silence.
What I could take away from the presentations of the other speakers like Alejandro Manalac, chairman of the National Real Estate Association, Romolo Nati, CEO of IDC and Joey Bondoc from Colliers International is that in real estate there are going to be some price adjustments in the high-end property segment and that despite the situation new opportunities may arise from struggling investors and from hard hit economies like Spain and Italy. So I guess it could be time to go property shopping abroad for some Filipinos! Architect Nati believes that the Philippines will probably not be too much affected since the trend to migrate to the provinces and outskirts of Metro Cities is spreading the general growth to secondary cities and that the “work-from-home” agenda of many companies now will just accelerate this trend. On the other hand retail and tourism properties like guest houses and hotels have been severely affected so far and will take a while to recover. He also added that he is confident that the economy will bounce back soon due to its underlying fundamentals and real estate, especially in the provinces will continue to grow even more where the location is right.
For the first time ever I heard the concept of the “new normal” from Joey Bondoc as he explained that commercial spaces will be more aware of social distancing and therefore restaurants will have a reduced seating capacity and stores will have to control the number of clients present in the store. Colliers in fact predicts the growth of the demand for warehousing space due to the increased home-delivery activities and properties linked to the e-commerce sector as well as a flexible workspace. In fact, it is predicted that not only in Metro-Manila about 50% of the employees of companies will either work from home or in flexible workspaces. Decentralization will, therefore, play a big role from here on especially in consideration also of the Balik-Provincia program of the government and the increased efforts to facilitate transport to the outskirts of the capital city.
With his 30 years industry experience, the last speaker was probably the most seasoned to weather economic downturns as he had already experienced two in the past. He advised real estate practitioners to tighten their belts and hang in there while reassuring their clients and stay connected to their industry peers. As for developers and agencies, he recommended keeping the sales force and their best agents financially happy and loyal. Ultimately he concluded that seen this situation people have realized that their best protection is their home and their home is their best asset.
It was a really interesting round of presentations and stories and the conclusion of the webinar was that real estate remains resilient and a good investment. We may now look at the property with new eyes considering the experience of the lockdown and the importance of the home environment.
Lorenz Ziller 01 May 2020
