Land values rising, mass housing gains attention


    Land values in the Philippines’ central business districts (CBDs) continue to rise, and while a little temporary glut appears in the condominium market, developers are gradually shifting their attention to the huge, under-served, low-cost housing market, Colliers International said in its third quarter property report.

    Rising Land Values in CBD
    “Land value in the Makati CBD rose 2.43 percent in the third quarter of 2015 to an average of P463,700 per square meter,” reports Julius Guevara, Colliers director for research and advisory services in the Philippines.

    In Ortigas Center, land value grew 4.71 percent to P172,700 per square meter, with new developments turning up in and around district, Guevara said.

    Fort Bonifacio in Taguig, however, saw its land value’s rapid escalation tapering in the period, slowing by 1.52 percent to an average of P400,100 per square meter.

    Going easy on condominiums
    The latest Colliers report said only three projects in the major CBDs were completed in the third quarter, while two other projects did not meet their expected delivery dates.

    The completed projects were: The Meranti at Two Serendra in Fort Bonifacio, with 800 units delivered; The Robinsons Land Sapphire Residences Tower 1, with 410 units and SM Shine Residences, with 712 units in Ortigas Center.

    Colliers expects no new residential developments being completed in Eastwood and Rockwell for the rest of 2015, while an additional 2,381 units are still expected next quarter in the major CBDs.

    Colliers earlier expected the residential property market to reach 8,253 units by the end of 2015, but has now revised its forecast to 6,209 units, due to project completion delays in the third quarter.

    Colliers sees an average of 7,466 units coming yearly from 2015 to 2019, with total expected inventory in the five major submarkets—Makati, Rockwell, Fort Bonifacio, Ortigas, and Eastwood—reaching 100,622 units.

    “About 93 percent of the new supply introduced from 2015 to 2019 in the major CBDs shall be located in Makati CBD, Fort Bonifacio, and Ortigas, with Fort Bonifacio still with the highest new supply, delivering 19,150 units in the next four years,” said Colliers.

    Noticing mass housing, at last
    If it’s any consolation to the low-end market, especially as the issue of inclusive growth has become a trend, the country’s affordable housing segment has finally caught the attention of developers.

    “Developers have been gradually shifting to less expensive products like affordable horizontal projects that tap the un-served housing demand,” Guevara reported.

    His group noted a growing number of new applications for low-income housing segments this year.

    The number of licenses for socialized housing doubled as of August 2015 from a year ago to 19,107 units, Colliers reported.

    Applications for licenses were also seen rising in the mid-income housing (up 56 percent) and low-cost condominiums (up 22.18 percent).

    On the other hand, for mid- and high-end condominiums, license applications fell 13.1 percent to 42,700 units for the first eight months of 2015.

    Colliers said the significant number of unsold condominium units has deterred developers from a wide-scale launch of new projects.

    As such, Colliers expects the supply in the residential units in 2015 to be less than what was earlier forecast.

    This mid- and high-end condo segment, though, accounts for the largest share of the total licenses (17.9 percent) issued in the period by the HLURB for the third quarter of 2015.

    Stable rental rates
    Meanwhile, Colliers said residential rents remained stable in the third quarter of the year.

    It said an average rental growth rate of 1.5 percent was recorded in the period for premium residential condominiums in the major CBDs.

    Rockwell recorded the highest growth in average monthly rent at 1.82 percent quarter on quarter at P952 per square meter.

    In Makati CBD, average monthly rent for premium three-bedroom units increased by 1.57 percent quarter-on-quarter at P875 per square meter while rents in Fort Bonifacio also grew by 1.26 percent at P882 per square meter.

    Colliers noted that rental rates could go down by as much as 5 percent by the end of 2016 if the completion of an unprecedented additional 13,400 units in the major CBDs materializes.

    “With an estimated 60,000 units being completed in the entire Metro Manila area by the end of 2015, plus another 51,000 units in 2016, leased condominium units in the fringe areas will compete with available units in the major CBDs,” it said in a report.

    “However,” it added, “worsening traffic conditions have made renting residential units in the CBD a more practical proposition for employees during the weekdays; this phenomenon may soften the impact of a more competitive leasing environment amid elevated levels of condominium stock.”


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