Residential property’s journey to recovery
The pandemic-induced disruptions have altered the Philippine economy and the property sector.
However, the government’s ongoing vaccination program is providing a glimmer of hope, while its projected recovery is expected to boost local investor and end-user appetite for residential projects. These developments are seen to raise demand for condominium projects in Metro Manila, especially in key business hubs such as the Bay Area.
It’s important that we identify the residential recovery enablers over the next 12 to 18 months. Are we starting to turn a corner? Will the green shoots of recovery result in a more robust and dynamic Philippine property beyond 2021? These are some of the questions we get during our property briefings.
This year, Colliers expects a recovery in new condominium supply as developers are already exploring the viability of new project launches in key areas across Metro Manila. Improvements in launches and completions send a positive signal especially for a supply-driven condominium market like the Philippines.
Recovery of office market
Based on a report released by Colliers Asia Pacific, Metro Manila remains one of the most attractive sites for outsourcing companies in the region. Among the factors identified in the report are competitive rents, improving infrastructure, and the availability of office spaces accredited by the Philippine Economic Zone Authority (Peza).
Despite the pandemic, outsourcing firms continue to occupy space across Metro Manila. In our view, occupying traditional office space will remain an integral part of outsourcing companies’ strategies post-pandemic. This should ensure a recovery in occupancy and lease rates beyond 2021.
The regional Colliers report identified the Bay Area as among the most attractive sub-locations in Metro Manila for outsourcing companies. Hence, we see the Bay Area attracting new BPO occupants beyond 2021. In our view, the Bay Area will continue to attract more locators due to the availability of Peza-proclaimed space, proximity to airport and other key public projects, and the presence of complementing residential towers.
Colliers estimates that about 337,000 sqm of new office space are likely to be completed in the Bay Area from 2021 to 2023, accounting for 15 percent of new supply in Metro Manila during the period. The Bay Area thus presents an opportunity for firms to consolidate due to the availability of office buildings with large floorplates.
Condo market rebound enablers
Complementing the office market is the condominium sector, which is likely to expand in the next 12 to 36 months.
We see the completion of about 15,000 new condominium units in the Bay Area from 2021 to 2023, representing about 60 percent of new completion during the period.
In our opinion, certain recovery drivers provide a sense of optimism in the market. In May 2021, remittances from Filipinos working abroad increased by 13 percent, representing the fastest pace of growth recorded since November 2016. Data from the central bank also reveal that remittances in the first five months reached $12.28 billion from the $11.55 billion recorded a year ago. OFW remittances continue to be one of the key drivers of residential demand.
Colliers believes that developers should be mindful of the pent up demand that is likely to kick in once the economy recovers. Below are some of the recommendations we believe developers should implement to take advantage of the projected rebound in condominium take up.
Maximize online platforms
Colliers encourages developers to consider maximizing their presence in social media and other digital platforms in order to inform potential buyers of their available and upcoming projects. Increased online presence may also help investors stay updated for any developments on their acquired properties. With mobility restrictions imposed by COVID-19, developers should organize virtual showrooms and expositions showcasing property offerings and investment opportunities. Aside from virtual expositions, we also recommend developers to make inquiries and acquisition of property more convenient and accessible by allowing an online option for payment and other transactions.
Incorporate new amenities
We believe that condominium properties remain an attractive investment option among homebuyers. To further attract more investors, some developers have been incorporating features such as built-in fiber-optic internet connection, co-working spaces, videoconferencing rooms, designated smart storage spaces for contactless parcel deliveries, and open recreational spaces for gardening and physical activities. Colliers encourages developers to continue improving the amenities within their properties.
Innovative pricing, promos
Colliers has observed that developers have been active in offering promos to attract buyers. Certain developers are also offering split or no down payments, lower reservation fees, and free items such as appliances, furniture, and gadgets. In our opinion, investors that plan on acquiring residential units should monitor the discounts and promos in both the secondary and pre-selling markets while developers should continue being innovative with their freebies and flexible with their payment terms.