Philippine developers should seize the opportunity provided by the growing popularity of joint venture residential projects across Metro Manila by firming up stronger partnerships with foreign developers and launching upscale and luxury projects.
In our opinion, local players should highlight their partnerships with Japanese firms who are 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.
Currently, joint venture projects between foreign and Philippine firms are among the more expensive in the market. Despite being classified as upscale and luxury, these projects have an average take-up rate of 85 percent as of end-2020. Fort Bonifacio, in particular, has been a popular site for joint venture projects.
Mutually beneficial
Colliers believes that local and foreign companies mutually benefit from these joint venture projects. 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.
Prior to the pandemic, the Philippines has been considered an attractive investment destination in the region. As a result, we have seen more foreign property firms partnering with local developers to build office, residential, and even township projects. The international partnerships will make the property landscape in the Philippines more competitive even beyond the pandemic. Overall, having more local and foreign brands would result in greater competition which should ultimately benefit Filipino consumers.
Recovery post crisis
Colliers noted that previous crises have affected demand for residential projects in Metro Manila, resulting in a price correction. But as historical data would show, the luxury segment is one of the more resilient, exhibiting stability amid financial crises and showing signs of immediate recovery after an economic slowdown. Luxury residential projects in Metro Manila in particular have recorded a steady rise in prices after the Asian and global financial crises.
Given the prices of projects in the luxury market, Colliers believes that buyers will be more discerning. In our opinion, investors are likely to look for innovative amenities and facilities, connectivity to masterplanned communities that offer open spaces, health facilities and services, new office buildings, and a high level of concierge services. Several projects that are being offered to the luxury and ultra-luxury markets have even partnered with prominent personalities and brands.
We are currently seeing some optimistic news about our economy and the global fight against COVID-19. There is some glimmer of hope and we are optimistic that this trend will also have a positive impact on Philippine property even beyond the pandemic. Both the Philippine economy and property sector have strong legs to stand on. And as data from Colliers Philippines would indicate, the property market bounces back after global economic meltdowns.
Shift in preferences
Prior to the pandemic, the shift in lifestyle further encouraged high-end buyers from posh villages to embrace condominium living. Aside from providing tight, round-the-clock security, these properties also offer well-equipped gyms, resort-like pools, ample parking spaces and quality interiors, among others. Most high-end projects, for instance, are near major shopping hubs in the metro. This is also important as consumers need to have immediate access to basic needs such as food and beverage and medical supplies.
Premium condominium projects continue to entice both end-users and investors due also to their proximity to the bustling business hubs such as Fort Bonifacio.
Attractive investment option
In our previous property market briefings, we presented graphs showing Philippine economic growth criss-crossing condominium price increase in Metro Manila. It showed a steady increase in condominium prices despite the boom-bust economic growth cycle starting in the late 1990s. This explained why condominiums remain an attractive investment option, particularly the luxury segment, which we believe is least affected by the pandemic and the economic slowdown.
Over the near to medium term, Colliers believes that Filipino end-users and investors are likely to see the launch of new luxury projects, greater acceptance for condominiums with large cuts, and the incorporation of innovative amenities and high-quality design. We are likely to see these being featured by JV projects between Filipino and foreign developers moving forward.