JVs seen beneficial for local, foreign brands
Local real estate companies are urged to seize opportunities from the growing popularity of residential projects being developed jointly with foreign property groups.
These joint ventures, said Colliers International Philippines, are proving to be mutually beneficial for both local and foreign developers.
“While foreign firms are enticed by high yields derived from Philippine projects, local developers gain by being vouched for by prominent foreign brands. Japanese brands are particularly known for their precision and high architectural and engineering standards, making their condominium projects an attractive option for local investors,” Colliers said in its Q2 research report released Friday.
“In our opinion, local players should highlight their partnerships with Japanese firms known for their technological innovation. Local developers should also emphasize the projects’ upscale amenities, integrated development, and potential for capital appreciation, which are all important to discerning buyers,” it added.
Beyond capital appreciation potential, investors and end-users are enticed by upscale facilities, innovative concierge services, and the advantage of being in a masterplanned development.
Among the major foreign firms that have established or expanded their respective footprints in the country by launching projects with local players are Hankyu Realty Co., Ltd., Mitsui Fudosan and Nomura Real Estate Development Co..
These joint venture projects, according to Colliers, are mostly luxury projects, with the total contract price ranging from P7.6 million to P31 million.
Despite being classified as upscale, these projects have an average take up rate of nearly 90 percent. It however also encouraged developers to launch affordable and mid-income projects with contract prices ranging from P1.7 million to P6 million to capture greater depth of this market segment.
As of the second quarter this year, take up in both the pre-selling and secondary condominium markets in Metro Manila remained strong due to appreciation potential and a wider base of buyers following the influx of offshore gaming firms from China, Colliers said.
The residential property market saw the completion of 2,600 units for the said period, bringing total completion in the first half to 6,300 units. As of end June, Metro Manila’s condominium stock stood at 125,150 units, data from Colliers showed.
“We now project condominium stock to reach 128,050 by the end of 2019, higher than our earlier forecast of 126,620 as three projects in Fort Bonifacio, Eastwood, and Makati CBD were completed ahead of schedule. Colliers sees Fort Bonifacio and Bay Area covering nearly 80 percent of new supply from 2019 to 2021. In our opinion, this complements the pace of office development in these two business districts as we see them covering a third of new office space due to be completed during the period,” Colliers said.
Colliers further disclosed that the completion of additional units across Metro Manila in the second quarter resulted in a higher overall vacancy of 10.6 percent from only 10.4 percent in the first quarter of 2019.
From 2019 to 2020, Colliers expects Metro Manila posting a vacancy of 11 percent a year due to the significant number of new projects in the pipeline.
Sustained growth rates
Average rents in prime three-bedroom units in Makati CBD, Fort Bonifacio and Rockwell Center meanwhile rose by 0.4 percent quarter on quarter. For overall Metro Manila, Colliers expects rents to increase by 0.9 percent annually from 2019 to 2021, close to its first quarter forecast of 0.8 percent.
Rental growth is expected to be sustained in business districts housing offshore gaming operators from China.
Capital values continued to increase as well with average prices of prime three-bedroom units in the secondary market in Makati CBD, Rockwell Center, and Fort Bonifacio ranging between P145,000 and P362,000 per sqm as of the second quarter. For overall Metro Manila, values are seen increasing by an average of 5.2 percent a year from 2019 to 2021.
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