Several studies conducted by economic think tanks and investment banks have recognised the growing population of the Philippines as an economic asset now and in the near future. A growing population means a growing workforce and a larger consumer base that could propel future economic growth for the country.
As of May 2010, the Philippine population stood at 92.1 million, with a median age of 23.4 years old – considered to be within the most economically active age cohorts of 21 to 35 years. The majority of the workforce in the offshoring & outshoring (O&O) industry – one of the strongest contributors to the economic growth in the Philippines – belong to this age group.
Locally, the attractive compensation packages offered by O&O firms have attracted a considerable proportion of this working population, effectively raising the disposable incomes of many O&O workers. This has consequentially supported their demand for a wider range of goods and services, including real estate.
This heightened consumer appetite has also translated to a greater demand for retail goods, encouraging retailers to take up more spaces, improving the occupancy level in retail establishments. While the growth in the O&O industry is not the only factor behind the surge in consumer demand, it is a sizeable market that has some retail establishments adjusting their operating hours to cater to the working hours of this industry. There has also been a recent emergence of retail offerings on the ground floors of office and residential developments, particularly in the established commercial business districts of Makati and Ortigas as well as in the emerging urban district of Bonifacio Global City where there is a large agglomeration of the O&O companies.
The effect is more visible in the residential property sector, especially in the mid-end residential condominium market. Higher disposable income in the O&O workforce has made it now one of the key target markets for property developers. These workers are mostly single who prefer studio-type units. Equally they have the potential to become upgraders in the near future as their disposable incomes rise or when they form new households through marriages. Although renters make up most of this demographic, some are buying condominium units – either as end-users or investors – supporting the demand in the residential market.
Admittedly, the country’s young and growing population is not enough to ensure the growth of the local property sector. Equally, strong government support is needed to further improve the human capital as well as sustain and enhance the country’s economic conditions. Nevertheless, we cannot deny the economic benefits of the country’s young and growing demographics on the Philippine economy and the property market.
About the author
Jan-lo de los Reyes is the Senior Research Analyst for Jones Lang LaSalle in Philippines.