Clear economic policies appealing to the office sector and demand from end-users over the condominium sector indicates continuous growth in the Philippine property industry for this year.
According to real estate firm Colliers International, the office sector closed strong in 2017 with an overall take-up of 639,500 sqm (6.9 million sq ft) net take-up in Metro Manila alone. This was caused by the growth of Philippine Online Gaming Operators (POGOs) as well as traditional companies.
Despite the decline in BPO demand in 2017, the industry still made up 25 percent of the total office take-up, next to POGOs with 35 percent. Colliers predicts the estimated 927,000 sqm (10 million sq ft) office space to be completed in 2018 would result in an increase in vacancy. However, it also gives developers a more competitive market in terms of cost, location and building quality. At the same time, tenants will have enough choices in office space particularly in Fort Bonifacio, Makati and Manila Bay areas.
Perhaps what tenants have to look out for are the new supplies to come from the Ortigas CBD, Quezon City and Alabang. These alternative locations may have to compete from Makati and Fort Bonifacio by offering discounts, particularly for anchor tenant, that coul reach twenty percent of the headline rate.
Condo purchases hit new record in 2017
Meanwhile, the 52,600 condominum units sold in 2017 is the highest in record since 2012. There are also an expected 27,200 units to be delivered in Metro Manila by developers this year.
It is predicted that demand for condominums will continue to be strong. One factor is due to the location of units within CBDs of Metro Manila like Fort Bonifacio, Makati, Ortigas Center and Manila Bay Area.
Condo living on the rise
Property website Lamudi Philippines also reported that while many prospects still prefer to buy or rent a detached house or apartment, condominium living is becoming more acceptable. And most developments in Metro Manila are searched by the millennial sector or individuals between 25 to 34 years old.
Lamudi’s data also revealed that condominium listings in Makati City had the most number of searches, approximately 1,100,000 or 18.70 percent on its real estate listings from January 2017 to mid-March of this year. Next to Makati is Taguig with 15.78 percent or 801,000, Quezon City with 12.31 percent, or 750,000 searches.
In Lamudi’s outlook for the Philippine real property market for 2017, Christopher Maglanoc, president of Avida Land, pointed out two buying-behavior factors of the millennial market when buying a condo unit: one, they look for accessibility or proximity to where they work; and two, they look for value for money. Millennials, according to him, are value-conscious.
It is also interesting to note that many property seekers are from outside of Metro Manila—from Antipolo City in Rizal, Cavite, Cebu and Davao Cities—with some coming from Singapore and ither countries. Lamudi speculates that those searching their website for potential properties may be overseas Filipino workers (OFWs) residing in Singapore or other neighboring countries.
Cebu is tops outside Metro Manila
As for provincial areas, Colliers still sees Cebu as the largest business destination outside Metro Manila.
The city’s office stock has reached 960,000 sqm (10.3 million sq ft) in 2017 and is expected to hit the 1 million sqm (10.8 million sq ft) mark this year.
What dominated the office transactions in the area is still the BPO sector. Interestingly enough, offshore gambling took up 25,000 sqm (269,100 sq ft) of office space during the first half of 2017, while Knowledge Process Outsourcing firms or KPOs occupied 20,000 sqm (215,300 sq ft) of office space.
As for the residential sector, more vertical (condominium) developments were constructed in Metro Cebu compared to horizontal (house and lot) projects. The condominium stock is currently at 33,400 units in Metro Cebu, over 24,500 or 73% of which are located in the provincial capital.
Last year, take-up on condominium units were at 5,600 units compared to the 2,100 for house and lots which led to the price increase on the former. The increasing demand, Colliers suggest, may be attributed to “the increasing land values which forced developers to focus more on vertical developments” and “proximity of the condos to the CBD”.
The already-positive outlook on the residential sector may be impacted should the expansion of the Mactan International Airport be completed by the middle of this year. It will make Cebu a more attractive location for both end-user and investors aside from boosting tourism in the area.