Breaking records: Preference for upscale, luxury condos extends beyond Metro Manila
In Metro Manila, the luxury residential market is taking center stage. The demand is partly driven by an affluent and discerning market on the lookout for topnotch amenities.
Colliers Philippines has been seeing this trend even in key residential hubs outside of the capital region, with some of the most expensive projects located in masterplanned developments in Pampanga, Bulacan, Cebu, Davao, Bacolod, and Iloilo, where condominium prices range from P185,000 to P262,000 per sqm.
In our view, average condominium prices in these areas will only increase moving forward due to the growing acceptance for condominium living outside Metro Manila and rising purchasing power of investors and end-users.
Colliers projects the development of more integrated communities as national property firms, as well as foreign developers, look for homegrown developers with sizable landbank that they can partner with. This development route should further be facilitated by a continuously improving infrastructure backbone across the country.
The demand for luxury condos is partly driven by the affluent
and discerning market.
Infrastructure to propel property
Infrastructure development has been a major plank of previous administrations’ economic programs.
Colliers is optimistic that further improvement of the country’s infrastructure network will benefit Philippine property. In particular, the completion of the government’s infrastructure projects has the potential to unlock land values, raise property prices, and spur economic activity in the countryside.
The Philippine government is currently planning to spend between 5 percent and 6 percent of the country’s annual gross domestic product (GDP) on infrastructure over the next six years. According to the National Economic and Development Authority (NEDA), the government has lined up 3,700 infrastructure projects worth P15 trillion until 2028. The implementation of these projects is widely anticipated by property developers.
In our view, the completion of expressways, railways, and airports should raise the attractiveness of provinces for integrated communities which should result in the development of more residential condominiums, as well as office towers and leisure projects.
In the next 12 to 36 months, we see the completion of big-ticket infrastructure projects such as the NLEx-SLEx Connector, North-South Commuter Railway, MRT-7, Metro Cebu Expressway, Davao Coastal Road, Davao Airport modernization, and Bacolod Economic Highway. Once completed, these projects should benefit the provinces of Bulacan, Pampanga, Cavite, Laguna, Batangas, Cebu, Davao and Bacolod.
There is a growing acceptance for condominium living outside of MetroManila.
Economic centers’ expansion
The Philippine economy is finally rebounding after a severe contraction in 2020.
Colliers believes that this expansion is likely to spur growth in economic centers outside of Metro Manila and should guide property firms’ development plans. The growing acceptance for condominium living, attractiveness of condominium as a hedge against inflation, and strong purchasing power of investors have been compelling property firms to launch luxury condominium projects outside of Metro Manila.
Assess viability of launching more upscale to ultra-luxury projects
Colliers recommends that developers further assess the reception of key provinces for more upscale and luxury projects, especially for condominium units developed within masterplanned communities.
In 2022, Colliers observed that some of the newly-launched provincial condominium projects by national developers are located in integrated developments. These include Rockwell Land’s The Bencab in its Rockwell at Nepo Center development in Pampanga, as well as Megaworld’s Herald Parksuites in The Upper East township in Bacolod and 9 Central Park in Northwin Global City in Bulacan.
These pre-selling projects’ total contract prices (TCPs) range from P6.8 million to P14 million per unit with prices per sqm ranging from P196,200 to P239,200.
In Metro Manila, the luxury residential market is taking center stage.
Upgrade amenities and incorporate more value-added features
Colliers recommends that developers upgrade their projects’ amenities and concierge services to differentiate themselves in the pre-selling residential market.
Results from Colliers Philippines’ Q3 2022 Residential Survey showed that about 83 percent of respondents prefer condominium projects that offer good ventilation as well as green and open spaces, while 16 percent prefer having a smart home system. Colliers believes that developers should consider incorporating amenities that will allow residents to work from home such as co-working spaces, function rooms and business lounges. Developers should likewise incorporate these features even for projects outside of Metro Manila.
We also encourage developers to integrate sustainable features such as sensor lighting, solar panels, occupancy sensors, LED lights and rainwater harvesting systems. In our view, adopting green and sustainable features will play an important role in enticing consumers to invest in a condominium project and cornering demand from affluent and discerning markets outside Metro Manila.
Partner with local/ homegrown developers with sizable landbank
Developers eyeing to expand in the provinces should be more strategic with their landbanking initiatives. National players should explore partnering with local or homegrown developers and even local government units (LGUs) that have a massive landbank, which can be developed into integrated communities.
Moving forward, we see this strategy dominating property firms’ initiatives especially in emerging hubs for residential development.
