The Philippine property market could be poised for a slowdown despite the country managing one of the fastest economic growth rates in the world. Analysts are blaming Donald Trump.
That's because the newly inaugurated U.S. president has been banging the gavel of protectionist rhetoric. In December, Trump threatened in a tweet to impose a 35 percent tax on products sold in the U.S. by any domestic business that moved operations overseas. Trump has also targeted specific businesses, particularly automakers, which were considering expanding outside the U.S. It's unclear whether he'll target services as well.
Credit Suisse pointed to recent "channel checks" on the office sector in the Philippines amid uncertainty over U.S. business process outsourcing (BPO) companies' plans to expand in the archipelago amid concerns over the protectionist rhetoric.
"Risk of slower occupancy ramp-up, or worse – cancellation of pre-commitments – for upcoming office space in the country seems to have been escalating in recent weeks," Credit Suisse said in a note on Tuesday.
"Aside from our recent channel checks with property agents, there has been a constant flow of negative news citing uncertainties about U.S. President Trump's protectionist rhetoric about outsourcing, which could slow down and/or delay expansion plans particularly for U.S. BPOs in the Philippines."
Remittances and the BPO sector are key pillars of the Philippine economy, contributing around 10 and 6 percent, respectively, to annual gross domestic product (GDP).
Trump's anti-immigration rhetoric could also impact remittances from overseas Filipino workers in the U.S.
U.S. firms account for around three-quarters of the $23 billion BPO sector in the Philippines, Reuters reported in December.
That could be a risk to economic growth in the archipelago, which saw its economy expand 6.8 percent in 2016.
Credit Suisse cited recent comments from the American Chamber of Commerce and Industry (AmCham) that U.S. BPOs had put expansion plans on hold.
That's set to slow the Philippine office market.
"We think the momentum of pre-leasing has been slower," Credit Suisse said, citing data indicating absorption rates of 2017 and 2018 office supply, 80-85 percent of which was in Metro Manila, was only 30 percent and 10 percent respectively. The bank forecasts that office space gross leasing area will rise by 19 percent a year over 2016-18.
To be sure, there might be another risk dampening U.S. firms' expansion plans in its former colony: Philippine President Rodrigo Duterte, nicknamed "Duterte Harry," has also spurred concerns.
His erratic outbursts have included threatening China with a "bloody" confrontation over disputes in the South China Sea as well as creating a strained relationship with former U.S. President Barack Obama.
Additionally, Duterte's "law-and-order" agenda has been blamed for a surge in extra-judicial killings. As many as 6,000 people have been killed in Duterte's crackdown on drugs since his June 30 inauguration.
—Evelyn Cheng and Nyshka Chandran contributed to this article.
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1