Getting ready for a rebound

It is the middle income and luxury market that saved the day for the local property sector.

According to Colliers Philippines, despite the pandemic, projects in the mid-income to luxury segments or those priced at P3.2 million and above showed resilience during the first nine months of 2020 and accounted for 89 percent of total launches during the period.

These projects also covered 85 percent of total sales in the pre-selling market, an increase from the 72 percent recorded in the same period in 2019. Over the past two years, these segments accounted for 68 percent of total pre-selling take-up in Metro Manila.

Colliers expects that demand in the residential sector in 2021 will be driven by mid-income to luxury projects.

As for the third quarter of 2020, it reported that projects in these segments due to be completed from 2021 to 2022 have already sold around 86 percent of their inventory.

But to tap pent-up demand, Colliers suggested that developers continue to offer flexible payment terms and adopt property technology platforms, including virtual reality tours and automated communication platforms for tenants and property management providers.

In its latest report, Colliers said that due to further construction delays, only 6,000 units will be delivered in 2020, or 59 percent lower than its initial projection of 14,720 units.

This year however, it expects the completion of 7,270 units, up 21 percent year on year, with 76 percent of the new supply likely coming from the Bay Area, followed by Fort Bonifacio, Alabang, Ortigas Center, and Makati central business districts.

As for vacancies, Colliers anticipates vacancy in the secondary market to decline to 13.5 percent by the end of 2021 from 15.3 percent in 2020.

It added that the government-projected rebound of remittances in 2021, lower mortgage rates, recovery of office leasing this year, and the likely pickup of take-up from end-users and investors, should spill over to the residential sector.

With an expected increase in demand, the group projects a recovery in terms of prices and rents starting in the first half of 2021 due to improved office space absorption. By the end of 2021, it projects prices and rents to grow by 1.7 percent and 2.1 percent, respectively, compared to minus 13 percent and negative 7.7 percent in 2020.

Colliers noted that condominium planners should consider attractive price segments and locations for pre-selling development. It revealed that in the first nine months of 2020, about 48 percent of mid-income projects that were sold during the period were located in Parañaque, Pasig, and the Alabang-Las Piñas area. Meanwhile, bulk of upscale to luxury projects that were sold were in Parañaque, Bay Area, Ortigas Center and fringe, and the C-5 Pasig corridor.

In the same report, the group revealed a steady demand for horizontal projects in key areas outside Metro Manila, including Pampanga, Cavite, Laguna, and Batangas despite the pandemic, which may be due to the fact that investors may be looking for homes offering larger living spaces, open areas, and outdoor space.

It also pointed out that the pandemic highlighted both investors and end-users’ desire to be in an integrated community, emphasizing that demand for residential projects will likely hinge on features such as immediate access to essential goods and services.

It added that residential developers planning to capture the demand outside Metro Manila should implement strategic landbanking and follow the infrastructure projects lined up by the government and due to be completed beyond 2022.

Colliers likewise advised developers to be more proactive in touching base with overseas Filipino workers that fuel the demand for residential units outside Metro Manila.

In its report, the group emphasized that developers should continue to adapt to the evolving preferences of investors and tenants to survive in a property market that has been redefined by the pandemic.

It explained that developers should continue converting and repurposing assets to take advantage of opportunities brought about by a lockdown economy.

It said office landlords should be proactive in offering alternative leasing schemes to tenants while mall operators and retailers should ramp up omnichannel strategies to take advantage of pent up demand. Condominium developers, meanwhile, should be on the lookout for attractive sites and price segments.

Meanwhile, in another report, Lamudi revealed that property seekers have maintained a strong appetite for real estate in major regions as they became more at ease with the new normal.

In terms of the most locations most viewed online in Metro Manila for properties for sale, Quezon City accounted for 48.7 percent of page views, followed by Makati with 15.5 percent and Manila with 9.9 percent. Pasig came next with 6.6 percent, and Paranaque, 5.8 percent.

Lamudi said that even in the third quarter of 2020, the most popular cities in the capital region are areas that host business districts and economic centers and this trend has remained constant throughout the year. This developed, it explained, may be attributed to more property buyers and even individuals looking to rent exploring locations close to employment opportunities.

The same five cities topped the list of Metro Manila locations with the highest number of leads and registered the highest number of inquiries, emerging as the most preferred locations for for-sale properties in the metropolis. These cities also commanded great demand even in the first and second quarters of 2020, making them resilient real estate hotspots amidst the crisis, the report noted.

Interested buyers inquired about houses the most, accounting for 43.3 percent of leads. Land followed with 31.5 percent and condominiums, 17 percent.

But aside from the urban centers, Lamudi said there is a strong real estate demand in other vibrant regions like South Luzon and Cagayan de Oro. South Luzon, it noted, has become a viable alternative to Metro Manila cities as it offers proximity to the capital region.

The report also observed that after the experience of staying at home for a long period, property seekers now appreciate large floor areas, resulting in house and lots and land-only projects capturing great interest.

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