Urban to suburban

We are seeing tempered launches and take-up of pre-selling condominium units in Metro Manila. This can be partly attributed to elevated interest and mortgage rates as well as the large stock of vacant ready-for-occupancy (RFO) units in the capital region.

Colliers thus encourages property developers to assess the most attractive price segment for every residential submarket in the metro; offer attractive leasing promos especially for local employees who are returning to the traditional office setup; and to continue landbanking outside Metro Manila, especially in areas near infrastructure projects such as airports and passenger railways due to be completed over the medium term.

Assess attractive price segment

In 2023, the luxury segment (P20 million and above) accounted for 11 percent of total condominium take-up. Colliers data showed that demand was driven by projects located in major central business districts (CBDs) such as Fort Bonifacio, Makati, and Ortigas Center. Colliers believes that the ultra-luxury segment will likely remain resilient amid a testy interest rate environment.

Meanwhile, the affordable to mid-income segments (P2.5 million to P12 million per unit) remain popular especially in fringe areas including Manila North, Quezon City North and the Camanava (Caloocan-Malabon-Navotas-Valenzuela) corridor.

In our view, developers should thoroughly assess which condominium price segment to launch for every residential sub-market in Metro Manila given the dearth of developable land, rising land values, and lukewarm demand for pre-selling condominium units.

Marketing initiatives should also be customized to target demand drivers for every condominium price segment. Overseas Filipino workers (OFWs), for instance, are likely to continue fueling take-up for affordable to mid-income segments while the experienced and affluent investors will drive demand for upscale to ultra-luxury condominium units.

Corner demand from employees returning to office

Colliers saw a significant decline in rents for studio and one-bedroom units in CBDs including Makati, Fort Bonifacio and Ortigas Center compared to pre-pandemic rates. Tenants are thus urged to take advantage of rental corrections in these prime locations.

Developers meanwhile should aggressively target employees working in major business districts. Firms with a significant number of RFO units should highlight their projects’ amenities and live-work-play features. The demand for RFOs should also be propelled by foreign employees returning to Metro Manila.

Continue strategic landbanking

Property firms remain aggressive in developing masterplanned communities outside Metro Manila.

Among the expansive townships launched by national players over the past 12 months include Ayala Land’s Centrala in Pampanga; Alsons Properties and DoubleDragon’s Northtown Center in Davao; Federal Land and Nomura Real Estate’s Riverpark in Cavite; and Megaworld’s Baytown Palawan in Puerto Princesa. Besides the lack of developable land in Metro Manila, Colliers attributed this move to the improving infrastructure connectivity in key development hubs as well as rising appetite for condominium projects and office towers outside the capital region.

In our view, property firms can command premium pricing for their residential projects developed within masterplanned projects while office developers are able to capture demand from emerging outsourcing destinations outside Metro Manila. Furthermore, the completion of MRT-7, New Manila International Airport in Bulacan, and North-South Commuter Railway should entice more property firms to landbank near these projects and develop new masterplanned communities.

Highlight property’s viability as an investment

Colliers sees young buyers and affluent investors continuously looking for residential units that have strong rental prospects and potential for price appreciation. Developers should thus highlight their projects‘ attractiveness for lease or potential for capital value growth, whether targeting local buyers or foreign investors.

With tempered launches and availability of RFO units in Metro Manila, we expect aggressive marketing initiatives from property firms over the next 12 months. Developers should also curate promotions and offerings based on their target markets, whether OFWs, young local investors, or the experienced and affluent buyers.

Sustaining the optimism beyond 2024

Colliers saw glimmers of recovery for the residential market in 2023. We hope to sustain this optimism beyond 2024.

With the Philippine economy posting one of the fastest expansions in Southeast Asia in 2023, Colliers believes that strong macroeconomic fundamentals are likely to lead the property market for a more sustained growth in the near term.

Developers and property investors should constantly be on the lookout for opportunities as well as global geopolitical or macroeconomic events that might hamper the property market’s rebound this year.