DIVING INTO REAL ESTATE OPPORTUNITIES POST-COVID
There are several opportunities in the Philippine residential market that developers should start capturing. Colliers Philippines is seeing several trends in the residential market, whether in the pre-selling or secondary segments. We are still far from pre-COVID-19 level of Metro Manila prices and rental rates but the residential market is definitely rebounding.
We are now seeing the return of more expatriates, signaling a recovery of the leasing market in Metro Manila. In the pre-selling sector, the take up in H1 2023 improved by 52 percent YoY while launches rose by 70 percent YoY.
Interest from local investors is picking up as reflected by improving consumer and business sentiments across the Philippines. Developers remain cautiously optimistic and continue to be strategic with their launches. Housing summits are back which only indicates that developers are starting to test the market’s overall appetite for new residential projects.
HIGHLIGHTING FEATURES THAT CATER TO BUYERS’ POST-COVID-19 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 more green and open spaces. Developers should 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.
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. In our view, these features are important in differentiating residential projects in the market.
SECURING GREEN BUILDING CERTIFICATIONS FOR RESIDENTIAL TOWERS
Colliers encourages developers to consider securing green building certifications such as Leadership in Energy and Environmental Design (LEED) or Building for Ecologically Responsive Design Excellence (BERDE) for their condominium and horizontal projects.
In our view, adopting green and sustainable features will play a crucial role in future-proofing not only office towers but also residential developments within and outside Metro Manila post-COVID-19.
EXPLORING JOINT VENTURE DEALS IN LAUNCHING UPSCALE TO LUXURY PROJECTS
We recommend that property firms seize opportunities in the market by partnering with foreign developers for the development of more luxury projects. In our view, these joint ventures (JVs) should help local players differentiate their projects in the market.
Developers should also emphasize the JV projects’ upscale amenities, integrated development features, topnotch concierge services, and strong potential for capital appreciation, which are important considerations for discerning investors and end-users.
EXPANSION FROM CITIES TO SUBURBS
More and more investors and endusers are willing to gravitate from the cities to the suburbs. We have seen people who own condominium units in Metro Manila expressing interest to purchase horizontal units outside central business districts (CBDs) particularly in central and southern Luzon.
Since the start of the pandemic we have seen a spike in demand for resort or leisure-themed horizontal projects. We see this trend persisting beyond 2023 as more Filipinos choose to feel the suburban vibe. With this trend, we see the demand for resortoriented residential projects outside of Metro Manila thriving. As a result, developers have aggressively launched new House and Lot and Lot Only projects outside of Metro Manila as they seize this growing demand from end-users. Expect more masterplanned communities in the fringes as connectivity in key regions improves.
CAPTURING RISING DEMAND FROM EXPATRIATES
Colliers believes that the leasing market has gradually picked up in 2022. We attribute this to the easing of restrictions of Covid protocols. In our view, the expats are now more inclined to return to the Philippines. Colliers has seen Fort Bonifacio as one of the most preferred locations among expats due to the presence of schools as well as retail and leisure establishments. Other popular options include Makati CBD and Rockwell. We have been getting more queries from large BPOs, manufacturing firms, and even multilateral lending agencies that are planning to welcome more expatriates. In our view, the upkeep of residential units should remain topnotch if investors want to attract renters, including discerning expats. Providing high-end appliances is definitely a plus.
OFFERING ATTRACTIVE LEASING AND PRICING SCHEMES FOR READY-FOROCCUPANCY (RFO) UNITS
Vacancy in the secondary residential market continues to hover above 17 percent. With the substantial inventory in the secondary market, developers should be proactive in offering leasing and early move-in promos for RFO projects, and we are already seeing some developers remaining aggressive in offering early move-in and rent-to-own schemes for their RFO units. A couple of developers are even allowing buyers to move-in with a down payment as low as five percent, and discounts of as much as 20 percent on Total Contract Prices (TCPs) for spot cash buyers. Attractive RFO schemes should be implemented especially in business districts where there will be substantial completion from 2023 to 2025 including the Bay Area.