Mass hysteria over coronavirus disease COVID-19 will impact the Philippines’ property sector in the first half of 2020, with the hospitality sector and major regional retail centers taking the biggest hits, according to Pronove Tai International Property Consultants.
“The property sector that will be heavily impacted in the short- and medium-term… will include the hospitality sector – these are your hotels, resorts, convention centers – because occupancy levels will drastically decrease due to the lower tourist arrivals, as well as temporary postponement of large MICE – the meetings, the incentives, conferences and exhibitions,” said Monique Pronove, president and CEO of Pronove Tai, in a press briefing on Thursday.
“Particularly for the major regional retail centers, it (the impact) will be because of the mass hysteria. Tenanted by food and beverage, cinemas, non-essential luxury [goods], these areas will be experiencing lower foot traffic,” she added, noting some of the types of tenants at Philippine malls.
“This hysteria will obviously impact those two sectors, but the leases for offices, for example, for other sectors, these are three to five year leases. It’s not going to go down drastically,” she said.
The consultancy anticipates there will be minimal impact and resiliency in the two biggest sectors in the local property market: the office sector and the residential sector.
Pronove noted that 54 percent of office stock is occupied by traditional companies such as legal firms, banks, insurers, logistics and retail firms, among others, while investments in the residential market have been driven by overseas Filipinos and the Philippines’ young labor force.
Those that would see a positive impact from the outbreak would be health and wellness, hospitals, supermarkets, and convenience stores, she said.
To soften the blow of the impact of COVID-19 on the industry and to minimize contagion, the property consultancy called on developers to regularly disinfect their buildings using US Environmental Protection Agency-standard disinfectants and to do thermal scans.
On the prospect of a lockdown, the idea of which President Rodrigo Duterte recently rejected for Metro Manila, Pronove said that would be a worst-case scenario for the property market.
“The ones that will be really impacted will be the retail. People will not go and eat, will not shop. It’s really the retail centers that are tenanted by non-essential items,” she said.
Michael Muñoz, research manager at Pronove Tai, said the government should rethink locking down specific areas, especially in the national capital region. “Basically, we are a consumption-driven economy, so we rely more on public spending and people spending,” he noted.
“What we don’t want is to see a lockdown. We don’t want to see ghost towns, because really it will impact all of us,” Pronove said.