Local property players will have to do things which were previously only talked about before COVID-19, “but do these faster, more creatively, and do them now”, to capture demand beyond 2021.
This was the succinct advice of real estate analysts in a recent online round table discussion hosted by Colliers International Philippines. While the analysts noted that residential projects in the luxury and mid-income segments are regarded as bright spots for the industry, as developers line up projects to capture recovery, these players will have to hunt up buyers more creatively using innovative payment schemes, promotional gimmicks, monitor completions in submarkets with high vacancies, explore opportunities in fringe locations, upgrade amenities and highlight health and safety most especially during these times; and highlight the advantages of living in a CBD, as opposed to “rurban” developments outside of major cities like Metro Manila.
The forum discussed a possible recovery from pandemic-induced disruptions starting next year as the economy further reopens, with the retail segment possibly benefitting from “revenge shopping” starting 2022 as mobility restrictions are eased, and as the country’s vaccination numbers further increase.
In its third quarter report issued last week, Colliers reported that outsourcing and traditional corporate occupiers continued to drive office demand in Metro Manila, but said that absorption of office space would remain negative in 2021 with the influx of new supply.
“To further bolster demand growth, we recommend investors and buyers to take advantage of the attractive payment terms currently being offered in the market,” it added.
Steady as she comes
The property research firm pointed out that while data indicated a reduction of demand for residential developments in 2021, this did not mean sales completely stopped amid the pandemic.
In Metro In Metro Manila, supply remains steady despite the delay in the completion of condominiums, and the stock in the metropolis is at 140,000, particularly from the central business districts (CBDs).
Bonifacio Global City has the lion’s share of the supply at 39,500, followed by the Bay Area at 28,700; Makati, 28,500; Ortigas Center, 18,700; Eastwood City, 9,600; Rockwell, 5,300; Alabang, 4,800; and Araneta Center, 4,500.
Developers were able to launch some 4,404 units in the pre-sales market in the first quarter of 2021, while take-up in the same period reached 5,358 units. New completion is expected to grow at 143 percent.
Of the first-quarter data, “mid-income-to-luxury projects continued to dominate, accounting for 97 percent of launches and 98 percent of take-up,” Colliers noted.
“Higher-priced joint venture developments between local and foreign developers, which offer innovative facilities and amenities, is likely to help drive demand until the end of the year,” it continued.
More discerning market
With a more discerning market on the horizon, property developers are faced with a challenge to be able to showcase its strengths in style and substance to appeal to investors willing to spend for design, aesthetics, and use.
“In our view, demand in both the preselling and secondary markets is likely to pick up on the back of an economic rebound, increase in vaccinations, and further easing of mobility restrictions across the country,” said Colliers associate director Joey Bondoc.
“This confidence should also result in improved office space absorption in Metro Manila by the latter half of 2022 which should signal the gradual recovery of condominium rents and prices during the period,” he added.