Amid the slowdown in take-up of residential projects in Metro Manila because of high interest and mortgage rates, property consultancy firm Colliers Philippines said developers should up the ante in attracting discerning home buyers.
Colliers Philippines director and research head Joey Roi Bondoc said in a briefing on the real estate performance in the first quarter of 2024 that developers need to recalibrate their strategies especially with slow launches and take-up in Metro Manila’s pre-selling condominium market.
“In our view, residential projects in Metro Manila that provide upscale amenities and top-tier concierge services continue to remain popular amongst the experienced and affluent clients,” Bondoc said.
Developers have integrated healthy and sustainable amenities into their newly-launched projects, while others also incorporated unique features such as glamping nook, garden gazebo and sky promenades as “hyper-amenitized” condominium projects become a norm.
Bondoc said that as more developers diversify outside Metro Manila by launching master-planned township projects, they should be able to integrate new features and services into their projects to satisfy residents’ evolving preferences.
“Developers have been launching master-planned township projects, but we believe that releasing a master planned community would not be enough. You need to make sure that you integrate features that will make your master-planned community stand out,” Bondoc said.
In 2023, upscale residential projects worth about P12 million to P20 million per unit accounted for 18 percent of pre-selling take-up, up from only 10 percent in 2022. Luxury condominium projects worth P20 million and up accounted for 8 percent in 2023.
Horizontal projects
Given the tepid pre-selling market in Metro Manila, Colliers Philippines said developers are launching more house-and-lot and lot-only projects in nearby provinces such as Bulacan, Pampanga, Laguna and Cavite.
For the past two years, Colliers Philippines recorded annual average take-up for horizontal projects in the neighboring provinces, reaching 29,000, up from 28,700 between 2020 and 2021.
Bondoc said property firms would continue to launch house-and-lot projects outside the metropolis because of strong demand from end-users.
Among the property developers that will launch massive horizontal project outside the National Capital Region are Rockwell Land with its 85-hectare property in San Jose, Bulacan and Century Properties which plans to launch five new house-and-lot projects under its PHirst brand with a combined land area of 85 hectares.
Property firms are seen to actively acquire land for future development and build expansive integrated township projects in prime developments outside the NCR.
Colliers Philippines said, however, property firms should continue to monitor interest rate changes and their impact on mortgages. Developers should also evaluate the most attractive price segments to seize recovering demand.
New supply
While only 2,180 residential units were completed in the first quarter of 2024, Colliers Philippines expects sizeable delivery of new condominium units this year.
According to Bondoc, roughly 9,100 more units would be completed for the remainder of 2024 to end the year with 11,290 units slated for turnover.
Bulk of the units that will be turned over the buyers are located in the Bay Area, accounting for nearly 80 percent of the new supply.
Bondoc said that from 2024 to 2026, an average of 8,000 residential units would be completed.
However, the substantial completion of new units would likely increase the vacancy rate on secondary markets, exert downward pressure on rents and result in slower growth in residential prices.
“We see vacancy increasing to 17.7 percent by end-2024, near the peak of 17.9 percent in 2021, due to the sizeable amount of ready-for-occupancy units in the market,” the property consultancy firm said.
From 2024 to 2026, Colliers Philippines projects annual rental growth of 1.6 percent and yearly price increase of 2.2 percent.