The market may have performed better than expected in 2023, but this year, developers are still in the process of adjusting their strategies to adapt to the changing market. Even with the apparent slowdown in activity in Metro Manila, performance of projects outside the National Capital Region (NCR) kept the market upbeat.
Growth continues
Data compiled by the Bangko Sentral ng Pilipinas (BSP) showed an increasing number of residential real estate loans (RRELs) over the past year, and it projected this trend to continue into this quarter. There is a widening gap between the number of loans granted in NCR and in areas outside NCR which started during the pandemic. In 2023, 66 percent of RRELs were granted for new housing units in areas outside NCR, which indicates that demand is continuing to move outside Metro Manila.
More options for buyers
When new residential projects were concentrated in Metro Manila, there were limited options for buyers. Even when buyers wanted to look for alternative (and potentially more spacious) units, there were drawbacks due to connectivity issues and lack of support facilities outside established districts.
However, scarcity of vacant land, coupled with high costs in Metro Manila prompted more integrated township developments outside NCR, supported by infrastructure developments. Lower land costs also allowed for low density horizontal projects, such as house and lots and townhouses, instead of the high density type of condominium projects within Metro Manila that aim to maximize developable land. Low density projects outside NCR allow developers better flexibility in the deployment of funds wherein they will not be committed to high capital tower projects.
Projects outside Metro Manila tend to be more affordable for buyers and have more spacious residential units within township developments that offer the convenience of living in a larger city. Infrastructure developments enable these townships more connectivity with major cities and other township projects.
Recalibrating strategies
Developers are actively trying to match the requirements of buyers and buyers’ capacity to pay, such as by offering new projects outside Metro Manila. However, there are still developers that are recalibrating their payment terms to minimize fallout risk while marketing existing inventory.
Future outlook
The residential market continues to recover, backed by positive indicators. However, key policy rates remain high, and there is still the looming concern on geopolitical risks. So, while developers are set to launch more residential projects within the year, both vertical and horizontal, inside and outside Metro Manila, developers are ready to alter their strategies to secure healthy sales levels with low fallout risk for their projects.
The residential market is seen to sustain growth, bolstered by geographically inclusive development, sustained by townships and heavily mobilized infrastructure projects.
“The fundamental factors that buoy residential market performance are infrastructure growth, affordability, convenience, and the dream of owning a home—with bigger space. These are facilitated by township developments outside Metro Manila,” said Roy Golez, director of Research and Consultancy of Leechiu Property Consultants Inc.