Buying properties in the Philippines: Challenges for investors
Michael McCullough, Managing Director of Savills, gave his insights on what might happen in 2023. They predict that interest rates could make it challenging for the upper mid-end residential sector, but luxury properties will remain stable. The low-end market, on the other hand, is predicted to continue performing well. In the office sector, some areas such as BGC and Global City are doing well, while others like Alabang are struggling. Due to high labour costs that make up 80% of BPOs' expenses, the demand for properties in the provinces is increasing.
The data centre industry in the Philippines is relatively small but has great potential for growth. Its current capacity is approximately 75 megawatts, and it could have a potential capacity of around 200 megawatts. Singapore is facing pressure to halt data centre construction due to data sovereignty concerns. However, the Philippines is becoming an attractive choice for data centre providers because of its large population and high consumption of social media, music, and gaming content.
Even though capital values have been stable, increasing interest rates may cause cap rates to rise, which could impact property values. This could result in fewer property transactions as buyers and sellers have different expectations. Nevertheless, investors are optimistic about the Philippine property market and see great potential for investment.
To know more, watch the full interview.