In my previous columns, I highlighted the need for more residential projects, which compelled developers to look for available land in non-core locations. As a result, other business hubs in the country’s capital region emerged, including the Ortigas East–C-5 corridor, which has become a new battlefield for interesting residential projects over the past few years.
With several integrated communities being developed within the capital region’s major business districts, property firms also responded to the demand for horizontal (house and lot, and lot only) units by launching projects in the fringes of key business districts. While we have seen a stable demand for condominium projects over the past years, some investors and end-users are still on the lookout for horizontal units especially in the Metro Manila peripheries.
Attractive payment terms, competitive mortgage rates
Colliers believes that developers can continue tapping this demand by offering attractive payment terms, highlighting potential for land value appreciation and stressing proximity to key infrastructure projects due to be completed beyond 2021.
We are now seeing low interest rates and we believe that this is one factor that keeps the residential market active despite the economic challenges. During the Asian financial crisis, interest rates reached 11 to 13 percent with mortgage rates hovering between 14 and 22 percent. But the Philippines’ financial system is now in a better position.
Rates now hover between 5 and 7 percent. That’s why it is no longer surprising to see investors awash with cash looking for properties to invest in, while some are scouting for options in the peripheries of central business districts.
And low interest rates are important in stoking demand in the residential sector, including the horizontal segment which covers house and lot, and lot only projects.
Infrastructure to buoy demand
Colliers believes that the viability of Metro Manila fringe areas for residential investments will partly hinge on the implementation of big ticket infrastructure projects, which are crucial in driving demand for 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. One example is the Ortigas East–C-5–Antipolo area which stands to benefit, either directly or peripherally, from the completion of infrastructure projects.
Among these public projects is the MRT-4, a P59 billion railway project that will connect Metro Manila and Rizal. The 18.4 km rail line will have 13 stations starting from N. Domingo, Quezon City, to Taytay, Rizal. Construction is set to start in 2023 and is scheduled to be operational by 2025, easing the traffic congestion along Ortigas Avenue. Once completed, the project is estimated to serve at least 220,000 passengers daily.
A P9.7 billion project and a 3.9 km extension of the existing LRT-2 system from Santolan, Pasig City to Masinag, Antipolo is the LRT-2 East extension. The project is scheduled for completion in April 2021 and is projected to improve connectivity between Rizal and Metro Manila.Another crucial project is Skyway C-6 Expressway (Southeast Metro Manila Expressway)—a 34-km expressway from Skyway/FTI to Batasan Complex in Quezon City. The project, which is targeted for completion in 2022, is expected to ease traffic congestion in Edsa, C-5, Ortigas Avenue and Extension.
Another project lined up by the government is the Pasig River Expressway (PAREx), a 19.4 km, six-lane expressway that will likely start from Radial Road 10 in Manila and end at the South East Metro Manila Expressway (C-6). This will also likely reduce travel time from Manila to Rizal to 15 minutes. PAREx provides an alternative route to the country’s business districts such as Makati, Fort Bonifacio and Ortigas.
Ripe for more developments
Overall, Colliers Philippines believes that the C-5–Pasig area is ripe for more residential projects, whether vertical or horizontal. In our view, investors and end users from Ortigas, parts of Pasig and other Eastern Metro Manila districts are likely to drive residential take up in the corridor. With increased competition, we also see developers becoming more innovative with their projects and this should benefit investors and end users.