The Philippine presidential elections in May are likely to delay any investment decisions by investors and developers, as they wait and see if the new administration will be business-friendly, analysts said.
This in turn will potentially worsen a market that is already reeling from the impact of the coronavirus pandemic.
"Some investors might take a wait-and-see stance until the new president is elected," said Joey Bondoc, associate director, research at Colliers Philippines. "Some developers are likely to resume developments and land banking once the new administration outlines its polices."
The Philippines' property market has been a casualty of the pandemic, after several lockdowns to contain multiple waves of surging infections tipped the economy into its worst recession in 2020, contracting it by 9.5 per cent. Last year, boosted by higher consumption and coming off a low base from the previous year, the economy bounced back and grew 5.6 per cent.
In 2021, occupancy rates of the various segments of the property market - office, retail and residential, particularly mid-market flats - declined by 7 per cent to 20 per cent, according to property consultancy Cushman and Wakefield.
There are two factors that will determine if Philippine real estate is going to benefit from the polls, said Claro Cordero Junior, director, research, consulting and advisory services at Cushman. First, is the election's credibility and second, its outcome.
"The biggest threat ... would be a hotly contested result that may potentially drag and delay the process and installation of a new administration," he said. "The release of credible election results, if significantly prolonged, due to these potential delays will undermine continuity and erode confidence among investors and consumers both in the economy and the property market."
The two leading candidates currently are at the opposite ends of the political spectrum: Ferdinand "Bongbong" Marcos Junior, son of the late dictator Ferdinand Marcos, and Vice-President Leni Robredo, who represents the camp opposed to the current regime of President Rodrigo Duterte. There are other presidential contenders as well.
Marcos is seen as the most popular choice among the masses, and is likely to get a massive chunk of support from Duterte's huge following. Robredo, on the other hand, has been picked by Japan-based finance group Nomura as likely to have the most positive impact on business in the Philippines.
Robredo was cited particularly for her experience and having a clear strategy to lead the Philippines' recovery from the pandemic.
On the other hand, given his association with Duterte, Marcos is more likely to continue policies that are friendlier to Chinese investors, including de-escalating tensions over the South China Sea territorial dispute.
The Philippine property market needs all the help it can get this year, said Michael McCullough, co-founder and managing director at KMC Savills.
"The office market rebound is expected to take place in 2022, but we still foresee a higher vacancy level as compared to 2021 on the back of about 703,000 square meters of new office space coming in for completion in Metro Manila, the largest of the next three years," he said.
"The bricks-and-mortar market is anticipated to improve, but below its pre-pandemic level. The flat market is expected to recover at a slow pace."
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