Real estate firms are expected to accelerate the building of new projects but will make sure that quality is not sacrificed, according to a report on the industry.
In its report “Flight to Economy and Efficiency—Market Insight Q2 2017,” Pinnacle Research said real estate developers have been aggressively capturing the demand of buyers and renters in the past years, and there is no sign of the trend slowing down.
“The big players have been innovating and blending their product offerings to maximize their margins in every location to put a flag on,” it noted.
It estimated that in Metro Manila alone, residential condominium projects would reach a total of 240,000 units by the end of 2017. For vertical socialized projects, the report said small and medium players are waiting for approval of the implementing rules and regulations for their segment.
“Pinnacle Research expects this steady flight to continue, although this continued growth should be taken with a grain of salt. Consumers are looking for high quality products for the most attractive rates,” it added.
“Extra diligence should be put into new products to avoid compressing margins later on due to competition. Most people love flying, and flying in economy class, especially those purchased very early are quite popular among Filipinos. Philippine real estate market will experience this ‘flight to economy’ without sacrificing quality in the coming months,” the report said.
Pinnacle Research cited some factors that will fuel real estate growth in the country, like the infrastructure spending of the Duterte administration.
“More important, these infrastructure developments are spread all over the country that would boost the countryside. The National Economic and Development Authority [NEDA] Board’s Investment Coordination Committee has approved P541.58 billion worth of rail and other infrastructure projects,” the report said.
At the macro level, the Pinnacle report added that the country’s gross domestic product (GDP) grew by 6.4 percent during the first quarter, which is slightly lower than the 6.8 percent growth for the entire of 2016. But, NEDA is projecting 7-percent growth for this year with the annual target pegged between 6.5-7.5 percent.
When it comes to foreign direct investments, the report said Bangko Sentral ng Pilipinas (BSP) figures show FDI reached $2.434 billion in the first four months of the year. While this is slightly lower compared to the same period last year, Pinnacle believes this year’s total FDI can breach the $7-billion mark like in 2016. The total FDI does not include investments by the business process outsourcing companies.
The report also cited the country’s top developers spearheading the real estate surge in the country: Ayala Land Group that will launch approximately P100 billion worth of projects this year, or an increase of 64 percent from 2016; SM Prime Holdings Inc. that became the first Philippine company to reach P1 trillion in market capitalization; Megaworld Corp. that is third in market capitalization with P146.36 billion and said to be biggest lessor of office spaces and urban township developer; Vista Land Group that recently increased its target offering to the property market from P30 billion to P42 billion this year; Robinsons Land Group that intends to grow its revenues from malls and offices as well as residential sales; and the Filinvest Land Group that recently started the construction of its “One Filinvest,” a 34-story tower that will replace the former Philcomcen building in Ortigas,
“The top developers have been leveraging their sizes to achieve an economy of scale. While most of them would be offering attractive rents and prices for their products, one of their eyes would be watching the quality of their offerings,” the report said.