News release

REIT a welcome development for real estate; office most attractive asset class

JLL’s research, “Philippine Real Estate Investment Trust: A Bright Spot in the Next Normal” says the start of the REIT market was a needed development for the industry.

August 18, 2020

The revised guidelines on Real Estate Investment Trust (REIT) in the Philippines boosted investment sentiment for the property sector, with the office segment the most attractive asset class, according to JLL Philippines, a real estate services and consultancy firm.

In its latest research, “Philippine Real Estate Investment Trust: A Bright Spot in the Next Normal”, JLL says the commencement of the REIT market in the country was well-timed and a much-needed development.

“We believe REITs are one of the country’s future bright spots and will play an important role in jumpstarting the economy from the adverse effects of the pandemic and will promote growth in the real estate sector. This will provide a cheap funding source for developers, raising fresh capital for finance future projects, which in turn will ramp up construction activities and employment,” said Janlo de los Reyes, JLL Philippines’ Head of Research and Consultancy.

Office segment an attractive asset class

Among the asset classes, the office segment is the most attractive due to its relatively stable outlook and resilient rental growth rates moving forward.

The office segment’s substantial growth over the years due to the demand from outsourcing firms and the online gaming sector, as well as the possible future office space demand from foreign investments, will make it an attractive asset class for REITs.

“As the government targets to reopen the economy and increase the operational capacity of businesses, we expect demand to improve in 2021 and potentially normalise in 2022,” says Luis Zarcal, Assistant Manager for Research and Consultancy. “We remain confident that traditional offices and O&O firms will spearhead demand post-lockdown. We may also see increased demand for office spaces outside Metro Manila, such as Cebu and Davao, for potential business continuity plan site locations.”

“Further, foreign investments diversifying manufacturing operations outside China could drive demand for office space, as these companies would need to set up headquarters for backend support,” he continues.

The under-penetrated industrial/logistics space is another attractive segment for REITs. The regional lockdown caused by the pandemic forced the country to tap the online/e-commerce platform to access basic goods and services, which pushed businesses to fast track digitalization efforts. This could scale up the demand for quality warehousing spaces to cater to the growing market of e-commerce.

On the other hand, the hospitality and retail sectors—two of the most heavily impacted sectors by the pandemic—could be less attractive to list in a REIT for property developers.

“We don’t see the usual sector demand drivers, such as foreign tourists and business-related travels, to return to the market until a vaccine is invented to make travelling comfortable and safe again,” shared Zarcal. “Moreover, for the retail sector, foot traffic in malls remains low due to persisting fears of virus transmission. Consumers thus prefer to shop via online platforms with takeout and deliveries becoming the norm.”

Positive medium- to long-term outlook

While the short-term prospects for Philippine REITs may be weighed down by weaker than expected economic and real estate performance, JLL says the medium- to long-term outlook suggests a huge potential to transform the local real estate landscape. “We believe that the REIT market will be the invisible hand that will guide the Philippine real estate market to develop into a more mature market, through transparency and competition,” says Zarcal.

“REITs will pave the way for more real estate transparency in the coming years, providing reliable benchmarks that were not readily available in the Philippine real estate market historically,” says Sharon Roset-Saclolo, JLL Philippines’ Director for Valuation and Advisory.

JLL Philippines Country Head Christophe Vicic echoes the sentiment, saying “REITs should rapidly become a substantial alternative investment vehicle in the country’s real estate assets market. It allows everyday investors to buy shares with a very small amount of cash, pool together then leaving it to professional managers on how and where to invest. Without a REIT, it would be impossible.”

Download JLL Philippines’ latest report, “Philippine Real Estate Investment Trust: A Bright Spot in the Next Normal,” here.

JLL has been operating in the Philippines since 1997 as a 100% wholly-owned entity and currently manages about 5.3 million square meters of real estate with a workforce of over 1,300 employees. With more than two decades of local expertise working hand-in-hand with its global legacy, JLL provides to the Philippine real estate market an unparalleled synergy of services with a strong commitment to achieve real estate ambitions through future-ready approaches. For further information, visit

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $18.0 billion in 2019, operations in over 80 countries and a global workforce of nearly 93,000 as of June 30, 2020. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit