NextGen Day

Given the reopening of the economy and the low level of private sector debt, representatives of a real estate brokerage firm in the nation are confident about the sustained growth of the domestic real estate industry.

David Leechiu, the CEO of Leechu Property Consultants (LCP), stated in a virtual briefing on Monday that although prices are rising along with the upward trend in interest rates, there is still strong demand for office and residential space.

According to the firm’s assessment, which looked at demand for offices through the middle of December 2022, it has already reached 975,000 square meters (sqm), which is more than the total demand from the previous two years, which was 389,000 sqm in 2020 and 540,000 sqm in 2021.

Given the hybrid work setup, the information technology-business process management (IT-BPM) sector accounted for the majority of the demand, at 466,000 sqm.

The analysis found that the IT-BPM sector would need about 793,000 sqm of office space if it resumed all office activity, with the return-to-work legislation anticipated in 2023.

According to the company, a live requirement for 210,000 sqm from the IT-BPM sector is already apparent.

Property developers are more impacted by the rising interest rate than customers, according to Roy Golez, director of research and consultancy at LCP, because the latter are given longer payment periods to lessen the impact of the higher rates.

“It’s more on the developer side where we will be seeing a higher impact of these interest rates as logistics inflation and interest rates impact on the construction cost when delivery these products,” he said during the same briefing. “Especially when the prices would have been fixed today and the construction for a certain building will be over a period of four years, possibly five years.”

Leechiu added that despite recent economic downturns and their effects on prices, the real estate market is still strong.

That is evidence of the high rate of savings and low levels of debt in the private sector. And for that reason, despite all of the increases in interest rates, the real estate market hasn’t really suffered much in terms of capital values, he said.

He claimed that many property owners “are strong-handed.”

He continued, “And I believe that this trend will continue.

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