Pandemic-induced disruptions have altered the Philippine economy and the property sector. The ongoing vaccination program, however, is providing a glimmer of hope, and the government-projected economic recovery should also provide a much needed boost to local investor and end-user demand.
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.
In our view, developers should further test demand in the luxury market and become more innovative with promotions and incentives. Strategic landbanking within and outside Metro Manila is also crucial at this point. We likewise see a stable demand for horizontal projects including house-and-lot, and lot-only units beyond the pandemic.
Further explore joint venture, luxury projects
We believe that projects in the luxury segment are the least affected during an economic slowdown. Joint venture projects between local and foreign firms are currently among the most expensive in the market, offering innovative facilities and amenities. Despite the higher price, the average take-up in these projects hit 85 percent as of end 2020.
Colliers believes that Philippine developers should seize opportunities in the market by further exploring partnerships with foreign firms. Given the potential demand, we expect more luxury projects to be launched, and these are likely to include joint venture developments. In our view, developers should further explore the viability of certain locations for JV and ultra luxury projects. They should also highlight amenities, proximity to key infrastructure projects and attractive payment terms.
Consider fringe areas for new developments
Over the past few years, the need to develop additional projects has compelled developers to consider fringe areas. Data from a Colliers survey in February 2021 showed that more than 70 percent of the respondents plan to develop a property in Mandaluyong and the Alabang-Las Piñas areas in the next 12 months. These areas accounted for 21 percent of total take-up for mid-income to luxury projects in 2020.
Innovative pricing, promos
In the fourth quarter of 2020, take-up in the pre-selling market fell by 53 percent to 6,000 units, from the 12,900 units recorded in the same period in 2019. Given the decline in demand, developers have started offering promos to attract buyers. Certain developers are also offering split or no downpayments, lower reservation fees and free items such as appliances, furniture and gadgets.
In our opinion, investors that plan on buying should monitor discounts and promos in the secondary and pre-selling markets. Developers’ sales teams, meanwhile, should be proactive in touching base with potential clients.
Constantly monitor key demand drivers
Colliers notes that remittances from overseas Filipino workers (OFWs) continue to drive demand for affordable to mid-income (P1.7 million to P5.99 million) condominiums in Metro Manila. Developers will likely continue to cater to families that receive remittances from abroad.
We recommend that developers monitor the COVID-19 situation in countries that are major sources of remittances. From January to February 2021, the United States, Saudi Arabia and Singapore accounted for about 50 percent of total OFW remittances. Data from the central bank showed that OFWs continue to send money to their families, which should help sustain demand for residential units.
Colliers has observed that several developers have been aggressive in mounting webinars to reach OFW clients. This is likely to be part of the new normal and will complement developers’ social media strategies.
Article and Photo originally posted by Inquirer last May 15, 2021 5:00am and written by Joey Roi Bondoc.
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