MULLING investing in real estate this year? Global online agent Lamudi gives five areas, where individual investors could most possibly get the most returns even beyond 2016.
These are: suburban apartments and townhouses, residential lots, strata-titled offices, townships outside Metro Manila, and upscale condos in major business districts.
Suburban apartments and townhouses
These are among the most-searched property types by Filipinos, Lamudi said, especially in the suburban areas of Quezon City, Parañaque, and Las Piñas.
“These properties are very much in demand among renters, especially starting families,” the online agent said. “One of the reasons is that these property types provide much larger spaces (including parking space for multiple vehicles) than condos, yet they are more affordable than stand-alone houses.”
Potential returns here are handsome, according to Lamudi.
“To give would-be buyers and investors an example, three-bedroom door apartments in Parañaque average P3.5-4 million, or monthly rents of Php18,000 to Php25,000. On the other hand, townhouses in Quezon City can be had for as low as P2.8 million to as high as P17 million,” Lamudi said.
Lamudi said one reason residential lots are highly sought-after is that these properties’ values tend to appreciate quickly.
“Unlike high-rise condos, where a seemingly infinite number of units can be built within a relatively small plot of land, there is only a limited amount of land developers can convert into subdivisions or gated communities,” Lamudi explained. “This is the reason why there aren’t a lot of them within really prime locations in Metro Manila.”
One example, it cited, is Alabang West by Megaworld subsidiary Global-Estate Resorts Inc. (GERI)—a gated enclave situated between the cities of Muntinlupa and Las Piñas.
According to GERI, land values in the 62-hectare township surged 19 percent in the 11 months since its launch, from P47,000 to P56,000 per squar meter.
The property firm also announced that 80 percent of Alabang West’s 788 residential lots, as of late 2015, have been sold.
The same can be said for Ayala Land’s Vermosa project in the cities of Dasmariñas and Imus, Cavite, Lamudi added.
“Within this estate is The Courtyards project, a high-end gated community, where an average lot measures approximately 693 square meters,” the online agent said. “This low-density community, upon completion, will have about seven to eight lots per hectare.”
Strata titled buildings are those that have multiple unit owners across a single property. The concept originated in Australia to allow corporate ownership structures in multi-level apartment buildings. The word “strata” means “levels.”
Lamudi said strata titled offices are perfect for individual investors, since they can buy units and have them rented out to various companies.
This, it said, is what differentiates strata-titled offices from those intended for information technology and business process outsourcing firms, which are built and owned by real estate developers and rented to third-party companies.
“Many people liken them to residential condos (hence, the term ‘strata-titled’) as they are similarly owned and managed,” Lamudi explained. “For property buyers looking to diversify their investment portfolios, strata-titled offices makes sense.”
Similarly, in its third quarter 2015 report, global property advisor Colliers International said decreasing land-bank options are pushing up capital values of office buildings in the central business districts of Makati, Bonifacio Global City, and Ortigas.
Among strata-titled developments now in the market are: Alveo Land’s Alveo Financial Center along Ayala Avenue, Makati, which has 363 units and sells P223,000 per square meter on average; and The Stiles in Circuit Makati, which has 283 units and sells for about P198,000 per square meter, according to Lamudi.
Also in Makati is Century Properties’ Century Spire, a 60-storey tower to rise in Century City and with about 283 office units for sale. The average price, Lamudi pegged, is P203,000 per square meter.
Other for-sale strata-titled office towers in Lamudi’s list in Metro Manila include: Avida Land’s Capital House in Bonifacio Global City, with 222 units at P142,000 per square meter; Daiichi Properties’ One World Place, also in BGC, with 283 units at P136,000 per square meter; and Filinvest Land’s Parkway Corporate Center in Alabang, with 390 units at P168,000 per square meter.
Townships outside Metro Manila
“With land values in Metro Manila becoming very expensive, property developers are looking further afield for their next big-ticket projects,” Lamudi noted.
Among these projects, it noted, are Century Properties’ Azure North in San Fernando, Pampanga, where the developer plans to duplicate its Azure project in Parañaque, and Ayala Land’s Alviera in Porac, Pampanga and Vermosa projects in Laguna and Cavite.
“These developers are banking on their previous success to push these projects forward and all look to perform well in 2016,” Lamudi said. “Ayala Land, for example, will be spending P70 billion over the next decade on its Vermosa project, which when completed will include office, retail, hotel, residential, and educational segments.”
According to Lamudi, developer Ayala Land Premier started marketing residential lots in The Courtyards section of Vermosa in 2014, and has since sold P4 billion worth of inventory.
Upscale condos in major CBDs
Metro Manila’s condominium boom is far from over, according to Lamudi, although noting that developers are holding back on their new launches due to massive supply, especially in the mid-market segment.
“This does not mean that no opportunities are available in the condo market,” it stressed. “On the contrary, high-end condos, especially larger ones, are expected to perform well both in capital appreciation and rental rates.”
According to Colliers, condo vacancy rate is lowest for luxury condos in Makati, expected at 5 percent to the third quarter of 2016.
“This is due in part to Metro Manila’s leasing market, driven primarily by expats and the BPO sector,” Colliers said.
But then, another global property advisor, Jones Lang Lasalle, reported that rents for Metro Manila luxury condos continue to grow, albeit moderately, on the back of strong demand from expatriate employees of multinational corporations.