Changing work styles fueling demand for coworking spaces

Demand for coworking workspaces in the Philippines is expected to rise amid easing inflation and as companies shift to flexible, short-term leasing, analysts said.

“The recent drop in inflation to 1.4%, coupled with the Bangko Sentral ng Pilipinas’ (BSP) guidance toward gradual interest rate cuts signals improving macroeconomic conditions, setting the tone for renewed business confidence and investment activity,” Ruth Coyoca, assistant vice-president for sales and business development at Greatwork Global Workspaces, said.

“For the coworking industry, this shift presents a significant upside,” she added.

The coronavirus pandemic has accelerated companies’ shift to flexible workspaces amid changing work styles. These include coworking spaces, hot desk and virtual offices and hybrid workspaces.

Ms. Coyoca said further rate cuts by the Philippine central bank could encourage both big and small companies to take up more flexible workspaces.

“Lower interest rates enhance liquidity and reduce the cost of financing, encouraging startups, small and medium enterprises and large corporations alike to explore expansion strategies, including new project teams and satellite offices,” she pointed out.

Inflation slowed to 1.4% in April, the lowest in over five years. BSP Governor Eli M. Remolona, Jr. earlier said they are open to cutting interest rates by 75 basis points more this year amid cooling prices.

To maximize the demand for coworking spaces, GreatWork is looking to strengthen its presence in central business districts such as Makati and Bonifacio Global City in Taguig.

It is also planning to expand in regional markets like Cebu, Davao and the greater Manila area amid the decentralization of the Philippine capital, Ms. Coyoca said.

“Our flexible lease terms, cost-efficient setups and prime locations allow companies to scale operations without the long-term financial commitments typical of traditional office spaces,” she said.

“Many international firms, especially those exploring soft market entries or setting up satellite teams, are turning to coworking solutions as a low-risk, high-agility option,” she added.

Weremote, a flexible workspace provider, said it has received inquiries from startups, business process outsourcing companies and corporate teams in need of satellite offices or swing spaces — temporary workspaces used by companies during periods of transition such as renovations, expansions or relocations.

“Flexible workspaces are no longer just a pandemic trend; they’ve become a reflection of how businesses now think about office use,” Weremote Managing Director Rene D. Cuartero said in a LinkedIn message.

He said companies want the flexibility to grow, scale down or adjust their team size without committing to long-term leases.

“Larger companies are coming to us to avoid the capital expenditures of fit-outs and office expansions as they want ‘move-in ready’ private offices,” he said. “On the other hand, smaller teams are choosing affordable but professional coworking spaces that give them credibility without the overhead.”

Mr. Cuartero also cited global economic headwinds from trade wars and geopolitical tensions, which have pushed companies to be more “risk-adverse” in terms of office space.

Traditional, long-term leases often come with heavy upfront costs such as fit-outs, deposits and long lock-ins, he pointed out.

For instance, outfitting a bare-shell workspace can cost over P50,000 per square meter, which may be too costly for some companies, Ms. Coyoca said.

“As these global economic changes continue, we see more companies choosing flexible setups like Weremote because they offer control, scalability and less exposure to risk,” Mr. Cuartero said.

Joey Roi H. Bondoc, director and head of research at Colliers Philippines, said the appetite for coworking spaces remains strong as more companies adopt the “work-near-home” trend.

“A lot… are choosing coworking facilities within condominiums or any co-working facility near their place of residence,” he added.

Source: Business World

Real estate risks need closer scrutiny

Even as the Philippine banking system has remained resilient, the International Monetary Fund (IMF) said risks in the real estate sector and consumer credit still require closer monitoring and could prompt the central bank to intervene.

“Financial stability risks remain contained. The banking system has sufficient liquidity and capital buffers, and nonperforming loans (NPL) are low,” an IMF spokesperson said.

Latest data from the Bangko Sentral ng Pilipinas (BSP) showed the banking industry’s NPL ratio eased to a three-month low of 3.3% in March.

“However, parts of the commercial real estate sector have seen persistently high vacancies and falling rents, and NPLs for housing loans remain elevated,” the IMF said.

Property consultant Colliers Philippines expects the vacancy rate for residential property in Metro Manila to hit 26% by yearend, while office vacancies are projected at 22% this year amid condominium oversupply and slow take-up of unsold units.

The BSP in its latest Financial Stability Report noted the “rising NPLs in the real estate sector.”

The NPL ratio for residential real estate was at 6.82%, while commercial real estate NPLs were 2.18% as of September 2024. The bulk (62.5%) of the real estate loan portfolio consists mostly of commercial loans.

The BSP also earlier said the mid- and low-cost housing segments, which account for a large part of residential real estate loans, have driven the rise in NPLs.

Consumer loans are also another area that the BSP needs to keep an eye on, the IMF said.

“The rapid growth in consumer credit, though a relatively small portion of banking assets, warrants close monitoring,” it said.

BSP data showed outstanding loans of universal and commercial banks rose by 11.8% to P13.19 trillion in March from a year ago.

Consumer loans to residents increased by 23.6% in March to P1.64 trillion, mainly due to the 28.8% jump in credit card loans to P959.43 billion.

The central bank must also be prepared to step in, when necessary, the multilateral institution said.

“The BSP should be ready to adjust macroprudential policy in line with developments in the financial cycle to preempt the buildup of vulnerabilities,” the IMF said.

In the same Financial Stability Report, the BSP said that the financial system’s real estate loan exposure will require “closer monitoring amid evolving market conditions.”

Banks’ real estate exposure ratio rose to 19.75% as of end-December from 19.55% at end-September.

This as total investments and loans extended by Philippine banks and trust departments to the real estate sector grew by 5% to P3.31 trillion as of end-December from P3.15 trillion in 2023.

The BSP monitors lenders’ exposure to the real estate industry as part of its mandate to maintain financial stability.

Source: Business World

Remittances higher in March at $3.13B

Money sent home by overseas Filipino workers (OFWs) rose in March compared to a month and a year earlier, data from the Bangko Sentral ng Pilipinas (BSP) showed.

At $3.13 billion, personal remittances were higher than the $3.024 billion recorded in February and also increased from the $3.051 billion seen in March 2024.

"Both land-based and sea-based workers contributed to the increase in remittances," the central bank said in a statement.

The result also came as several overseas Filipino groups called for a zero remittance week from March 28 to April 4 in protest over the arrest and extradition to The Hague of former president Rodrigo Duterte for alleged crimes against humanity.

The latest monthly count pushed the first-quarter remittances tally to $9.4 billion, up 2.7 percent from the $9.15 billion recorded in January-March last year.

In March alone, money sent home via banks totaled $2.81 billion, 2.6 percent more than the $2.74 billion posted a year earlier and February's $2.72 billion.

The US continued to account for the biggest share of overall remittances at 40.7 percent, followed by Singapore at 7.6 percent; Saudi Arabia, 6.2 per-cent; Japan, 4.9 percent; and the United Arab Emirates, 4.6 percent.

Rounding out the top 10 were the United Kingdom (4.4 percent), Canada (3.1 percent), Taiwan (2.8 percent), Qatar (2.8 percent), and Hong Kong (2.7 percent).

The BSP qualified that remittance data by source has limitations, with the US appearing to be the main source as remittance centers in cities abroad commonly course the money through correspondent banks that are mostly located in the US.

Sought for comment, Philippine Institute for Development Studies Senior Research Fellow John Paolo Rivera said the increase in remittances was largely due to sustained demand for Filipino labor abroad, particularly in the areas of health care, engineering and domestic services.

"Seasonal factors like Holy Week and school-related expenses may have also encouraged higher remittance flows during the period," he added.

"Despite global uncertainties, remittances continue to show resilience, serving as a critical support for household consumption and a buffer for the country's external accounts."

Source: Manila Times