The May 2019 mid-term elections brought a positive political climate despite several hiccups along the way, including delay in some of the government’s infrastructure projects during the first half of 2019. The Philippine economy is continuously growing, bolstered by another credit rating upgrade.

Pinnacle Real Estate presents a breakdown of these market indicators.

GDP Growth Rate

GDP growth rate increased 5.6% in first quarter of 2019 compared to 6.2% of the same period in 2018, but higher than its neighboring Asian countries like Indonesia (5.1%), Malaysia (4.5%), Taiwan (1.7%), and Singapore (1.2%).

Interest Rate

One factor contributing to the lower-than-expected GDP growth is the Bangko Sentral ng Pilipinas’ (BSP) decision to increase bank lending rates five times in 2018 in order to cope with the rising inflation, reaching 6.9780% in May compared to 6.1184% in December 2018.

Inflation Rate

From an average of 5.1% in 2018, Draconian management of bank rates reduced inflation rate to 2.7% as of June 2019.

Overseas Remittances

On a positive note, total remittances from overseas Filipinos grew 4.1% or $9.739 billion for the months of January to April this year compared to $9.353 billion for the same period in 2018. Total dollar remittances for the entire 2019 is expected to reach the $30 billion mark.

Foreign Direct Investment

Latest BSP figures show that foreign direct investments (FDI) reached $1.941 billion from January to March 2019, 15.14% lower than for the same period in 2018. Expansion from both the business process outsourcing (BPO) and Philippine Offshore Gaming Operators (POGO) industries may spike foreign investments after a relatively successful mid-term elections.

Currency Exchange

The Philippine peso slightly strengthened as of June 2019, to Php1 : $51.803 (compared to P1 : $52.631 in 2018). However, this exchange rate is still relatively weaker compared to the exchanges in the past five years.

Foreign Tourist Arrivals

Based on latest data from the Department of Tourism, total international arrivals reached 2.205 million for January to March 2019, up 7.59% from 2.049 million for the same period in 2018. This growth trajectory will soon breach the 7 million mark and may even approach the 8 million mark by end of 2019. Another noteworthy milestone is the country’s hosting of the Southeast Asian (SEA) Games this year, which will have an impact on tourism.

Unemployment Rate

Unemployment rate remained flat at 5.1%, data from Philippine Statistics Authority (PSA) shows.

Real Estate Market Insight

On a positive note, the recent mid-term elections have put away some level of uncertainty in the market. Real estate players are taking advantage of this bullish sentiment by continuously supplying the market to cope with end-use demand.

Office Market

The Philippines is still at an advantage, the first choice among BPO locators. On the other hand, POGOs are aggressively expanding, boosting already sky-high office rental rates. Stock of Grade A offices in Metro Manila has reached over 10 million square meters by end-2018 and shall reach 11.7 million square meters by end-2019. Vacancy rate improved from 7% to 6% by end-2018.

Residential Market

Residential property values have been continuously increasing in the past three years according to BSP’s Residential Real Estate Price Index (RREPI). It increased to 117 from its base of 100 in 2015. The country’s top real estate players (Ayala Land, SMDC, Megaworld Cop., etc.) are still building, thanks to demand. Pinnacle forecasts that the total number of condo stock will reach 395,000 units by end of 2019, while absorption is seen to inch up to 94% this year because of the strong demand from foreigners.

Other Sectors

For the retail market, mall giant SM Prime will increase its retail footprint by 200,000 square meters, or approximately five to seven new malls this year. In the hotel market, approximately 28,000 new hotel rooms will enter the market in the next 2 years, reaching the 100,000-room mark. In the industrial market, Ayala Land and Megaworld continuously offer industrial spaces to pent-up demand from foreign occupiers.

Download Pinnacle’s latest Market Insight report to know more.