An emerging battleground for residential developments
From major central business districts (CBDs) such as Makati and Ortigas, the need for more office and residential projects compelled developers to look for available land in non-core locations. As a result, other business hubs in the country’s capital region emerged.
We have seen how previously idle properties were transformed into bustling communities. This is a strategy implemented by real estate firms even in the past—redeveloping a mothballed power facility into a thriving residential community; transforming an idle textile mills into a fully-developed outsourcing hub; repurposing the location of a former international school into a mixed-use property; and redeveloping the old site of a provincial capitol into a mixed-use project in eastern Metro Manila.
Aggressive development
Over the past three decades, the need to adequately address issues plaguing Metro Manila such as worsening traffic, flooding, and poor mass transportation systems has compelled private firms to take the lead in developing masterplanned communities. The expansion of economic activities in the country’s capital also buoyed the demand for integrated communities outside of key business locations. This led to the development of townships including those along the Pasig-C-5 corridor. The profile of recently completed projects indicates that the area is an emerging battleground of residential developers in Metro Manila.
Colliers Philippines believes that the redevelopment of properties in the peripheral areas of major business districts is a strategy implemented by developers as they cater to the constantly evolving demands of the market. For instance, we have observed that rising demand and land prices have enticed industrial property owners in strategic locations to liquidate land holdings in favor of mixed-use township developments. Examples of these are the developments around Pasig and C-5 area. The strategic location and the proximity to residential areas and office districts unlocked the potential of these former industrial properties for more profitable uses. This is a property development trend that is likely to be implemented in other non-core locations within the capital region.
The condominium projects due to be completed in the C-5-Pasig area in the next three to five years have average prices ranging from P107,000 to P230,000 per sqm. These are mid-income, upscale and luxury projects with total contract prices of above P6 million per unit. The average take up rate of units due to be completed in the next three to five years is almost 80 percent, which indicates a strong demand for condominium units in the emerging residential and office district.
Infrastructure push
Colliers believes that the area will benefit, either directly or peripherally, from the completion of a number of big-ticket infrastructure projects. In our opinion, infrastructure projects near new business and residential districts are crucial in driving demand in and raising the viability of thriving communities. At Colliers, we have been highlighting the importance of public projects such as roads, subways, and railways in raising land and property values across the country.
There’s the proposed MRT 4, a monorail project with an estimated cost of PHP59.3 billion that will connect Metro Manila and the province of Rizal. The 18.4km rail line will likely consist of 13 stations. Construction is set to start in 2021 and is targeted to be operational by 2025.
Another important project lined up by the government is the LRT-2 East Extension. This is a P9.7 billion project and a 3.9 km extension of the existing LRT2 system from Santolan in Pasig City to Masinag, Antipolo. The project is scheduled for completion in December and is expected to improve access between the province of Rizal and Metro Manila. This is an important project especially for businesses trying to capture the skilled manpower from the eastern part of Metro Manila.
We are also optimistic that the 34-km Skyway C-6 expressway will benefit potential property investors and end-users in the area. The project will be from Skyway/FTI to Batasan Complex in Quezon City. The project is expected to partly ease traffic around C-5, Ortigas Avenue and Extension areas.
What’s next?
The pandemic has affected the property sector. While Colliers sees a tepid demand for condominium projects in 2020, we remain optimistic that the economic recovery starting the fourth quarter 2020 will help buoy demand for condominium units in Metro Manila, with the spike in interest spilling over to new residential projects in the Pasig/C-5 area.
Colliers recommends that developers highlight projects that are within integrated communities. In our opinion, the pandemic has further emphasized the need to be in an integrated community where unit owners can easily access essential goods and services. We encourage developers to highlight the integrated features of their residential projects as this is likely to be among the major considerations of unit owners post-lockdown and COVID-19 pandemic.
In a survey conducted by Colliers Philippines during our property briefing on July 30, about 37 percent of respondents prefer condominium units located in an integrated community while 16 percent are likely to invest in residential projects that implement strict health and safety protocols amid the pandemic. Interestingly, some 38 percent consider discounts and flexible payment terms as a major factor in buying condominium units.
And this is a reason why developers should continue to offer flexible payment terms and attractive packages to potential condominium buyers in Metro Manila. We encourage investors to always be on the lookout for projects with discounted rates, both in the pre-selling and secondary markets.
Despite the pandemic, we are optimistic that the pent up demand for condominium units in Metro Manila will kick in once market conditions start improving in the fourth quarter 2020. Developers should closely monitor global and local economic updates, implementation of infrastructure projects, OFW remittances, status of small and medium enterprises, and viability of non-core locations for residential developments.
Condominium investors and end-users, meanwhile, should follow interest and mortgage rate movements as well as new and exciting residential projects being developed in emerging locations within the national capital region.
The C-5-Pasig area, for instance, is ripe for more condominium projects which should complement the development of more office towers in Ortigas and its peripheral areas. Households from Ortigas, parts of Pasig, and other Eastern Metro Manila districts that are upgrading to condominium living are also driving residential take up in the corridor.
