Metro Manila’s residential housing market seen growing 50% in 4 years

Driven by rising prices, cross-border investments, and robust demand, Metro Manila’s residential market will grow by 50%, translated to 3 million square meters (sqm) of housing space, in the next four years, real estate service provider Santos Knight Frank yesterday predicted.

Already, prices have increased across all segments quarter-on-quarter and are now at R74,000 per square meter for Affordable housing (+6% change); R115,000 per sqm for Mid-end (+1% change); R165,000 per sqm for High-end (+2% change) and R220,000 per sqm for Luxury (+1% change).

The BPO boom increasing demand for shared accommodation, the middle income sector posting the highest take up of projects as well as growing interest in the high-end residential segment and rising demand for professional tenancy management account for the growth of the market, according to Santos Knight Frank.

First of all, “The 1.3-million strong workforce in the IT-BPO sector represents a sizable market for residential developers and investors,” explained Jan Custodio, Senior Director of Research and Consultancy.

Hence, “Developers have designed new residential products that fit the specific need of millennials and reduce travel time at affordable rents.”

“Shared accommodation spaces such as condormitels, which feature facilities such as swimming pools, gyms and 24/7 security, are expected to be the new wave of residential developments to rise in central business districts and IT-BPO hubs,” he added.

Secondly, “Despite escalating prices in Metro Manila’s mid-end projects, the Middle Income sector segment had the highest average take-up of 22 units per month in the first half of the year,” according to Chairman and Chief Executive Officer Rick Santos.

“The mid-end market has become one of the most attractive arenas for developers. With the growing Filipino middle class, we forecast that demand will remain healthy in the forthcoming years.”

Thirdly, “Demand for the luxury and high-end residences over the past quarters have been strong, with buyers coming not only from the local high and ultra-high net worth markets, but also from China, Japan, South Korea, Hong Kong, and Southeast Asia,” he pointed out.

“In particular, absorption of luxury residences is one of the highest vis-avis other segments at 86%, signifying growing interest in the country’s prime residential market.”

Lastly, “Individual residential investors are in search of professional tenancy managers to run the complicated day-to-day operations of their portfolio and ensure that the property’s value is maximized,” says Vice President of Asset Services Group Nelson Del Mundo.

Tenancy managers act as a liaison between a tenant and owner, address technical concerns and apply revenue management strategies.

“We’ve seen this strong demand for tenancy management services not only in central business districts but also in tourism destinations such as Tagaytay, where a lot of residential developments are in the pipeline.”