Property values across Metro Manila’s central business districts held steady in 2023, with commercial lot transactions in Makati City fetching up to P1.5 million per square meter (sq. m).
Leechiu Property Consultants Inc. (LPC) said in a report this proves the market’s resilience despite the local and global headwinds this year.
A commercial lot at the center of Makati was sold for over P1.5 million per sq. m., while another landmark deal in Legazpi Village involved a transaction worth P1 million per sq. m., it said.
“In the Bay Area, a commercial lot traded hands at P400,000 per square meter,” it said.
LPC said Filinvest City in Muntinlupa cemented itself as the main central business district in the south, posting a 15-percent year-on-year increase in transaction values this year.
Share prices in golf and country clubs outside Metro Manila also showed high double to triple-digit growth in 2023, propelled by improved road infrastructure. Valley Golf and Country Club in Rizal emerged as the standout performer outside Metro Manila, growing by 173 percent, while Manila Golf took the spotlight in Metro Manila with a substantial 82-percent increase.
“Despite these landmark deals, transaction volumes are still thin as investor outlook remains cautious on the back of the 100-basis point increase in BSP [Bangko Sentral ng Pilipinas] key policy rates this year from 5.5 percent to 6.5 percent. Should the anticipated interest rate cuts materialize in 2024, we may see improvement in transaction volumes,” LPC said.
It noted that property real investment trusts (REITs) grew their total portfolio coverage to 2.43 million sq. m. since in 2021. The REITs continue to grow their portfolios despite valuation compression due to the high interest rate market.
Investors view REITs as an attractive investment alternative with significantly higher yields than traditional real estate assets, according to the real estate brokerage firm.
LPC said that in the residential market, 2023 marked the recovery of the condominium segment in Metro Manila, which saw a record of 40,555 units sold. The sector reached its peak performance two years before the onset of Covid-19 but faced challenges during the pandemic.
The ensuing market decline prompted developers to offer buyer-friendly payment terms to stimulate demand. However, these measures also increased backout risk. In 2023, developers reassessed their sales strategies to balance between increasing sales and mitigating buyer attrition, it said.
“The market exhibited significant growth, indicating a trajectory toward a more normalized real estate cycle: pre-sales grew by 14 percent, and new project launches surged by 66 percent compared to the previous year,” it said.
It said the first quarter sustained an 8.3-percent increase in pre-sales carried over from 2022, likely stemming from the favorability of payment terms. As developers adjusted the terms, coupled with stricter buyer screening and requirements, the next three quarters showcased a more stabilized pre-sales landscape.
“On the supply side, there was a surge in launches during the first quarter of 2023, reflecting the attractive sales levels achieved. However, as increased backouts became evident, developers gradually restrained launches to manage inventory, resulting in a 30 percent quarter-on-quarter decline in fourth-quarter launches,” it said.
LPC said despite this trend, pre-sales remained strong, with 9,720 units sold.
Demand drivers for the sector remain stable, supported by consistent factors such as overseas Filipino workers’ (OFW) remittances which are projected to close at $36.1 billion, marking a 2.5 percent increase from 2022.
The IT-BPM sector continued its impressive growth, generating 130,000 new jobs, reaching a total of 1.7 million full-time employees by end-2023.
LPC said that aside from the robust demand for residential condominiums in Metro Manila, there’s a growing interest in residential units outside the capital region. Emerging townships, which are less congested and offer more spacious options, are witnessing increased demand due to lower acquisition costs.
“The market outlook for 2024 signals a shift toward a more inclusive growth. While residential projects within Metro Manila will continue to attract buyers, projects just outside the capital region, particularly in southern fringes, are expected to experience active demand levels,” it said.