This is the second of a two-part article. The first part was published on Oct. 17 https://www.bworldonline.com/property/2023/10/17/551787/overcoming-headwinds-maximizing-tailwinds/.
CAPTURING RISING DEMAND FROM EXPATSColliers believes that the leasing market has gradually picked up in 2022. We attribute this to the easing of restrictions of coronavirus disease 2019 (COVID-19) protocols.
In our view, the expatriates are now more inclined to return to the Philippines. Colliers has seen Fort Bonifacio as one of the most preferred locations among expats due to the presence of schools as well as retail and leisure establishments. Other popular options include Makati CBD and Rockwell.
We have been getting more queries from large business process outsourcing (BPO) firms, manufacturing firms, and even multilateral lending agencies that are planning to welcome more expatriates.
In our view, the upkeep of residential units should remain topnotch if investors want to attract renters, including discerning expats. Providing high-end appliances is definitely a plus.
OFFERING ATTRACTIVE LEASING, PRICING SCHEMESVacancy in the secondary residential market continues to hover above 17%. With the substantial inventory in the secondary market, developers should remain active in offering attractive leasing and early move-in promos for ready-for-occupancy (RFO) projects.
A couple of developers are even allowing buyers to move-in with a downpayment as low as 5%, and discounts as much as 20% on Total Contract Prices (TCPs) for spot cash buyers.
Attractive RFO schemes should be implemented especially in business districts where there will be substantial completion from 2023 to 2025, including the Bay Area.
RECOVERY ON THE HORIZONColliers Philippines believes that property developers should be guided by the interest rate environment and future modifications should have an impact on the promos and payment schemes that they will implement for the remainder of the year.
Given the compressing yields in the market, property firms should also continue highlighting the capital appreciation potential of condominium units, especially those located in masterplanned communities. Developers should zero in on the residential units’ viability as a hedge against inflation.
In our view, 2024 will likely remain to be a precarious period for the secondary market with the completion of a significant number of new condominium units, especially in the Bay Area.
Colliers is optimistic that vacancy will improve towards end-2023, but vacancy will likely spike again due to completion of additional units. We are retaining our forecast of marginal rise in rents and prices annually from 2023 to 2025.
With substantial completion in the market, we expect developers to remain cautiously optimistic with their launches. Attractive payment packages and leasing schemes are likely to continue.
The Philippines’ property segments are starting to rebound. At Colliers, we always say that while some are recovering at a much faster pace than others, there’s no doubt that developers, investors, and end-users are starting to reap the fruits of a real estate market that is finally seeing light at the end of the proverbial tunnel.
Joey Roi Bondoc is the research director for Colliers Philippines.
