OVER THE HUMP

Colliers study reveals ‘brighter recovery prospects’ for residential market in 2023

Is the worst over? Yes, so it seems, when looking at the studies provided by Colliers Philippines in its Q4 2022 Philippine Property Market Briefing. Colliers provided studies on the different sectors of the property industry, but we’re focusing this time on the residential market.

In its media briefing held last Feb. 2, 2023, Colliers revealed that appetite for condominium units in the secondary market is “rebounding as shown by improving vacancies in Metro Manila’s key business districts.”

“This has resulted in marginal improvement in rents and prices after corrections in 2020 and 2021. The completion of projects also increased in 2022 but we see a slowdown in 2023. The improvement in condominium take-up for 2022 is supported by the central bank’s latest residential price index. Overall, improving business and consumer sentiment should help boost demand not just for residential units in Metro Manila but also for residential projects located outside the capital region,” said Colliers.

Colliers believes that “developers should further test the market for more luxury and ultra-luxury projects,” which accounted for 34 percent of takeup in 2022.

“To capture pent-up demand, developers should also aggressively promote features that cater to investors’ post-Covid preferences. Pre-selling projects in the peripheries of Metro Manila have also been attractive and developers should look at the viability of launching more units in the fringes,” it added.

According to Joey Roi Bondoc, Colliers’ director for research: “We are optimistic of better recovery prospects this year. Colliers is projecting improvement in vacancies across Metro Manila’s secondary market, and this should result in rebound in rents and prices. We see continued queries from expatriates while demand from local employees has been raising rents in major business districts such as Makati, Fort Bonifacio, and Ortigas. We expect developers to continue lining up new condominium projects in 2023. Over the near to medium term, developers and investors should keep an eye on persistently high inflation and its potential impact on interest and mortgage rates.”

In recommending to test the market for more luxury and ultra-luxury projects, Colliers has observed stable demand for luxury (P8 million to P20 million) and ultra-luxury projects (P20 million and above) in Metro Manila.

“In 2022, the segment accounted for 34 percent of total condominium units sold, up from 5 percent in 2021. Colliers also recorded the launch of 6,000 luxury and ultra-luxury units in 2022, representing 25 percent of total launches during the period. In our view, take-up from this segment will likely be supported by demand from affluent investors upgrading for their enduse. Investors also acquire these properties due to their capital appreciation potential.”

Among the luxury and ultraluxury projects launched in Q4 2022, Colliers stated, include Rockwell Land’s Edades West and Arthaland’s Eluria. These preselling projects’ total contract prices range from ₱102 million to ₱149 million per unit with prices per sq meter ranging from ₱472,000 to ₱519,000.

'To capture pent-up demand, developers should also aggressively promote features that cater to investors’ postCovid preferences. Pre-selling projects in the peripheries of Metro Manila have also been attractive and developers should look at the viability of launching more units in the fringes.'

“We see the launch of more luxury projects especially in properties in major business districts being redeveloped by property firms.”

There’s also a need to highlight features that cater to buyers’ post-Covid preferences.

“The results of our Q3 2022 Residential Survey show that 83 percent of our respondents prefer condominium projects that offer good ventilation, as well as green and open spaces. Developers should also consider incorporating amenities that will allow residents to work-from home or multi-task, such as co-working spaces and business amenities including function rooms and business lounges, as well as smart home systems,” Colliers said.

“Overall, more than 90 percent of respondents believe that having green and sustainable features is important in a residential development. We encourage developers to consider integrating features such as water recycling and treatment facilities, sensor lighting, solar panels, and pocket gardens to capture the demand from discerning buyers looking for innovative and sustainable features.

Last, Colliers recommends developers to explore mixedused projects in fringe areas and explore the feasibility of launching more master planned or integrated communities in Metro Manila’s fringe areas.

“Colliers believes that the completion of railway projects such as the Metro Manila and Makati subways should further unlock office, residential, and retail opportunities in these peripheral locations.”