THE office vacancy rate is projected to ease in 2025, driven by increased demand following the signing of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act, according to financial services provider Unicapital Group.
Office demand for next year will be driven by outsourcing companies, with the CREATE MORE law permitting up to 50% of employees to work from home without losing tax perks, Unicapital said in an e-mailed statement on Monday.
“This will encourage businesses to establish offices in the country,” Unicapital said.
Unicapital expects the office vacancy rate to rise to 20.5% this year due to the exit of Philippine offshore gaming operators.
However, the figure is expected to ease in 2025 with less new supply in the pipeline.
The CREATE MORE Act slashes the corporate income tax to 20% from 25% for registered business enterprises (RBEs). It also mandates that the local purchases of export-oriented enterprises are zero-rated, and importations are exempt from value-added tax.
The law also institutionalizes flexible work arrangements for RBEs operating within economic zones and freeports without affecting their tax incentives.
For 2025, Unicapital expects inventory levels in the residential segment to decline to 11 months of sales from 12 months due to recovering demand and slower supply as developers take a more cautious stance.
Sales take-up is expected to grow by 9% next year, led by easing mortgage rates in response to lower policy rates as well as more favorable payment terms.
Unicapital said the Philippine Stock Exchange index (PSEi) could reach 8,000 next year, up by 14% from the estimated 7,000 level at the end of this year.
The company added that further policy rate easing will support corporate earnings through a lower cost of capital and increased consumer spending.
“This is supported by the anticipated further reduction in policy rates by the Bangko Sentral ng Pilipinas (BSP). However, there are downside risks to this, including prolonged elevated interest rates and the escalation of geopolitical tensions that disrupt trade supply,” Unicapital said.
On Monday, the PSEi rose by 1.03% or 69.87 points to 6,850.
For next year, Unicapital said the country’s inflation rate is expected to be at 3.1%, below the BSP’s 4% target ceiling, while the Philippine economy is forecasted to grow by 6.3%.
“We are confident that there are opportunities for the Philippines despite the risks. We have seen similar circumstances in the past, but with the government stepping up to ensure measures are in place to boost the equity market, everything will fall into place and yield positive results,” Unicapital Group Chief Executive Officer and President Jaime J. Martirez said.
“The government’s signing of the CREATE MORE law is timely in further institutionalizing actions that will enhance corporate profitability,” he added.
Unicapital added that the peso may weaken against the dollar as the upcoming Donald Trump administration could lead investors to favor assets in the United States.
“The investment house believes policy rate cuts should continue, but the pace remains uncertain amid possible inflationary pressures from US protectionist policies under the incoming US government administration,” it said.
“A downward pressure on oil prices is also expected, driven by several factors including potential trade frictions leading to increased US production and weakened demand,” it added. — Revin Mikhael D. Ochave