Real Estate Landscape amid Philippine Tourism Reactivation

by PRIME Philippines Research & Advisory  June 4, 2020

It is no secret that tourism has been one of the badly hit industries by the COVID-19 pandemic, but despite the crisis, the Department of Tourism (DOT) continues to think of ways on how to mitigate the economic impact of the pandemic.


One of which is the partial resumption of travel and other activities in areas that: (1) highly depend on tourism for their local economy; (2) are under the modified general community quarantine (MGCQ); and (3) are relatively smaller destinations where activities can be contained and better managed. 


As the tourism department prepares to revive the country’s tourism industry, what could possibly happen to real estate developments? How can the gradual reactivation of Philippine tourism affect the real estate landscape?


Hotel Sector

Although only essential non-leisure travel between General Community Quarantine (GCQ) to MGCQ places or vice-versa is allowed, some tourist destinations may also reopen during the MGCQ, allowing leisure travel to happen. As long as it is approved by the Local Government Unit (LGU) and given with Certificate of Authority to Operate, accommodation establishments, such as hotels, resorts, and tourist inns, are allowed to operate and accept bookings from guests whether for work or leisure, but only at 50% operational capacity. Coming from an almost 3-month hiatus, going back on operations during the MGCQ can pave the way for the hotel sector’s eventual recovery from the pandemic.


Retail Sector

Under the MGCQ, retail developments are also allowed to operate at 50% capacity. Given this and the partial resumption of travel in selected areas, greater tourist demand can be expected, which may lead to an increase in foot traffic in retail developments, such as malls.


Considering the current situation, immediate allowance of international travel is unlikely. However, the forecasted allowance of domestic travel may engender the gradual recovery of the tourism industry in the country; this may, in turn, positively affect the real estate landscape. Full recovery will take a while but will eventually follow.


Until COVID-19 vaccine is available and cases are rising, the full recovery and future of the Philippine tourism remain uncertain. The partial resumption of travel and tourism operations may not be enough to cover up for all the losses from the pandemic, but is a good way to prepare the tourism industry as it redeems its position in the economy before the pandemic.