Manila falls near bottom of list ranking city investment prospects

MANILA slumped to near bottom in a ranking of city investment prospects in the Asia-Pacific for 2022, a joint report from the Urban Land Institute and PricewaterhouseCoopers showed.

In the 2022 Emerging Trends in Real Estate report, Manila ranked 21st out of 22 cities in terms of city investment prospects, slipping from 19th spot in the previous year.

The Philippine capital was classified as having “generally poor” investment prospects this year.

Manila only performed better than Kuala Lumpur, which ranked 22nd. The bottom of the list featured all of the region’s developing markets, which continue to suffer from high rates of coronavirus disease 2019 (COVID-19) infections.

“Despite boasting both a young demographic and an economy with positive longterm fundamentals, Manila will struggle to digest a large amount of incoming supply on both the residential and office fronts, even as demand has weakened due to lockdowns and business closures,” the report said.

Manila’s property sector has also been affected by the exodus of Philippine Offshore Gaming Operators, which had taken up new supply before the pandemic.

“Business process outsourcing (BPO) facilities, meanwhile, have fallen victim to the work-from-home wave, although over the longer term the industry may benefit from a global trend towards employment decentralization,” the report said.

Tokyo topped the list, as it benefitted from “low interest rates and an economy that is largely fueled by domestic demand.”

Along with Tokyo, Singapore, Sydney, Melbourne, Seoul and Osaka were classified as cities with “generally good” prospects.

“2022’s top markets for investment prospects in the region were characterized by abundant core capital and a flight-to-safety approach,” the report said.

For real estate investors, the most problematic issue remains the impact of the COVID-19 pandemic on property rent and values.

Investors are also concerned about low yields, vacancy rates, and lack of investable properties.

The Emerging Trends Asia Pacific report is based on a survey of 233 real estate professionals, and 101 interviews, including investors, developers, property company representatives, lenders, brokers and consultants.