Real estate opportunities up north, down south
The COVID-19 pandemic has been compelling investors to look for alternative sites outside Metro Manila. Outsourcing companies, for instance, are exploring competitive locations as they firm up their business continuity plans amid the pandemic and lockdown. Property investors with units in Metro Manila are scouting for residential projects in less dense cities.
When investors search for viable property investments outside Metro Manila they immediately think of areas in Southern and Northern Luzon. Cities and municipalities in these regions are among the most competitive in the country and benefit from a steady supply of skilled manpower. Also, the benefits of the national government’s infrastructure implementation and decentralization programs trickle down to these areas.
Colliers believes that the government’s active infrastructure implementation and decentralization program even before the pandemic have been encouraging developers to look closely at provinces in Northern and Southern Luzon regions. While developments are more pronounced in South Luzon due to the completion of major infrastructure projects such as Skyway, South Luzon Expressway, Cavite-Laguna Expressway, and Cavitex, the Central Luzon corridor is fast becoming a preferred destination of both developers and investors given the public projects likely to be completed in the near to medium term.
Northern and Central Luzon’s potential as a major economic corridor
Macroeconomic figures indicate that these regions are among the most competitive in the country. Central Luzon, composed of Pampanga, Bulacan, Tarlac, Bataan, Zambales, Aurora and Nueva Ecija, has been growing by about 8 percent a year from 2017 to 2018. It covers 10 percent of the Philippine gross domestic product (GDP). The region is a major manufacturing location, with its industrial parks being among the key export processing sites in the country. The region is also one of the largest sources of overseas Filipino workers which, anecdotally, had driven the demand for residential projects. Data from Philippine Statistics Authority (PSA) showed that the region accounted for 14 percent of OFW deployment in 2018.
Previously, the region’s potential to become a major business corridor was constrained by the lack of infrastructure. Realizing the importance of connectivity in stimulating business activities, the current administration lined up a number of projects that Colliers believes should play a significant role in transforming the region into the country’s next major economic corridor.
These include Skyway stage 3, Clark Airport expansion, Subic-Clark cargo railway, and Manila-Clark passenger railway. These projects are due to be completed from 2020 to 2025 and should complement the completion of major road projects such as SCTEX and TPLEX. We see these infrastructure projects boosting office, residential and industrial demand in Metro Clark.
These public projects are complemented by a skilled manpower and a business environment that is generally conducive to businesses. Hence, we see tremendous opportunities for office, residential and industrial sectors. The recovery of the travel segment should also stoke the area’s hospitality sector. Given the relatively cheap developable land in the region, Colliers believes that the development of integrated communities is a practical route for many developers especially as they recapture pent-up demand once the pandemic wanes.
Southern Luzon solidifies stature as a property hotspot
Southern Luzon meanwhile has always been a major growth driver of the Philippine economy, accounting for about 14 percent of the country’s GDP.
Region IV-A or Calabarzon’s GDP has been growing by an average of 9 percent yearly over the past two years, faster than the Philippines’ average growth. Aside from industrial and commercial activities, the corridor is also a major recipient of remittances from OFWs. Despite the COVID-19 pandemic, we see these remittances fueling residential demand in the region.
With improving infrastructure and expanding commercial activities, it is no longer surprising to see major developers acquiring large parcels of land in the region as they cash in on the economic corridor’s potential.
Strategic landbanking amid the pandemic
To cash in on the opportunities, developers must intensify efforts in terms of strategic landbanking and constantly look for developable land in the Cavite-Laguna-Batangas area.
Colliers believes that the infrastructure projects lined up by the government should ease some of the congestion pressure in the urban core and into the suburban areas. Major developers already have a significant landbank in key areas outside of the country’s capital and smaller players are encouraged to intensify efforts to acquire more land to take advantage of the greater accessibility made possible by infrastructure projects.
In our opinion, developers and investors should be mindful of the following trends amid the pandemic.
For one, the COVID-19 pandemic highlighted the need to be in an integrated community. Condominium investors, for instance, have become more aggressive in scouting for properties that are within townships. Colliers believes that in the next 12 to 36 months, the demand for residential projects, whether house and lot (H&L) or condominium units, will likely hinge on integrated features, i.e. residents having immediate access to essential goods and services. Colliers recommends that developers highlight the integrated features of their residential projects.
Colliers sees residential investors and end-users becoming more discerning. The pandemic raised the need to strictly implement physical distancing protocols and property management procedures within residential buildings and communities. In our opinion, developers and property management firms should highlight sanitation and emergency preparedness as these are among the major considerations of buyers.
The government-projected pace of recovery in 2021 is likely to revivify residential demand. To continue capturing opportunities, Colliers encourages developers to offer discounts and flexible terms to complement the prevailing low mortgage rates in the market.
Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.