Manila is the hottest luxury home market in the world, beating out the likes of Boston, Tokyo, and Paris, property consultancy Knight Frank says.
Luxury prices shot up 11 percent in 2018 as the capital city of the Philippines got a boost from a robust economy, a shortage of luxury homes and increased appetite for them by the wealthy foreigners living there.
The ranking of 100 cities is based solely on how much their luxury home prices increased last year.
The only other Asian city in the top 10 list was Singapore, where prices jumped 9.1 percent.
Tokyo came in 11th, rising by 6.8 per cent; Paris, 19th, up by 5.3 percent, and London, 91st, down by 4.4 percent.
Beijing was tied for 25th place, was up by 4 per cent and ranked the highest among mainland China cities. Hong Kong was tied for 47th place, up by 1.8 percent.
Luxury property is defined as the top 5 per cent of each market by value.
Mainland renters outpace Western tenants as the biggest spenders for luxury rental homes in Hong Kong.
Ten US cities made the top 100 list. Boston came in first among US cities, in 8th place, with an 8.6-percent gain, and San Francisco ranked 10th, with a 7.8-per cent rise.
Knight Frank cited Manila’s annual GDP of 6 percent last year as one of the factors that “motivated some expatriates to grab a slice of real estate back home.”
The annual report aims to signal market opportunities to the consultancy’s clients.
But even though Manila topped the list, its percentage rise was still considerably lower than the previous top-performing markets, which grew by at least 21 percent, Knight Frank said.
The slower growth in luxury home prices was attributed to the end of the ultra-low interest rates era that began boosting real estate markets globally in 2008.
“While Manila’s 11 percent growth is far from the norm for the city, it confirms the theory that outliers are disappearing, and we are moving to a period of slower price growth. Within Asia-Pacific, a slowdown from a 4.9 percent average growth rate in 2017 to 2.7 percent in 2018 illustrates this trend,” said Nicholas Holt, Knight Frank Asia-Pacific head of research.
Philippine developers have been focusing on more affordable housing, where the demand is deemed larger.
“There are only four luxury residential projects in the pre-selling stage. Target completions are within the next five years,” said Jan Paul Custodio, senior director for research and consultancy at Santos Knight Frank.
“Of the 700 units of luxury residential apartments floated, 93 percent have already been absorbed as of 2018. Post-selling luxury projects, on the other hand, are 95 per cent sold, with less than 15 units available,” he added.
In 2018, Manila luxury homes market drew ₱6.5 billion pesos (US$125.1 million) in investments, down 35 percent from ₱10 billion in 2017.
“[The] decline is mainly attributed to the limited remaining inventory in the market, Custodio said.
In late January, a new luxury project with 180 prime residential units broke ground, adding supply to the market.
Makati, the premier business district, and neighboring Bonifacio Global City, corner Manila’s luxury market. The Estate Makati, a joint project of firms owned by the Philippines’ two wealthiest families, is expected to command higher prices.
“The price increase was largest in Makati, where less than 1 percent of floated inventory remains unsold,” Custodio said.
Demand, he said, is mainly coming from expatriates and high net worth locals.