Demand for residential and hotel/leisure property was steady in the first quarter of 2017, real estate consultancy Pinnacle Research said in a report.
Unlike the office market, which Pinnacle described as being tight due to high demand and the limited availability of new office space for lease despite new building completions, demand and supply appear to be well-matched in the residential sector, suggesting growth will remain steady throughout the year.
Pinnacle Research said that high-end developments remain the biggest segment of the local market. The real estate analysts explained that approximately 44 percent of condominium developments are high-end (priced over P7 million per unit); 37 percent are middle-market; and 19 percent are lower mid-market (priced less than P3 million per unit).
Makati and Bonifacio Global City (BGC) business districts dominate the high-end residential products, especially those units for leasing due to the concentration of expatriates and local executives.
In a report last week, online real estate services firm Lamudi Philippines pointed out that at least 23 buildings in major residential condominium projects around Metro Manila are expected to be completed this year.
In terms of the residential rental market, Pinnacle Research said that luxury condominium units command the highest rents, which is currently averaging about P1,000 per square meter per month across the Metro Manila market, or P300,000 per month for big units of 300 sqm.
A handful of units in Rockwell, Makati and in BGC even reached the P1,100 per sqm per month rent level, Pinnacle said.
The typical rental range for luxury two-bedroom and three-bedroom units is between P120,000 and P250,000 depending on the size, furnishing, and location. For the luxury and high-end segments, there are limited choices for rent, Pinnacle added.
Pinnacle Research said Metro Manila fringe areas are now being increasingly explored to serve the demand for residential projects.
The residential areas of Alabang, Muntinlupa to Sto. Tomas, Batangas, and the provinces of Laguna and Cavite comprise the fringe areas.
Pinnacle Research noted delays in turning over of new buildings, attributing this to a shortage of skilled laborers. Last January, the Department of Labor and Employment projected a surge in demand for construction-related jobs.
Hotel and leisure sectors
Although tourist visitors are spending less according to Department of Tourism figures, Pinnacle Research noted that demand for hotel and leisure real estate remained steady, with a mix of high-end and mid-range properties being developed.
For the first two months of 2017, a total of 1,210,817 visitors arrived in the country. The total visitor arrivals were 10.88 percent higher than the accumulated 1,091,983 arrivals for the same period in 2016, and are on track to reach the government’s target of six million visitor arrivals for 2017, Pinnacle said.
In revenue terms, January to February visitors generated P40.08 billion this year, compared with P49.93 billion for the same period last year, a year-on-year decrease of 18.92 percent.
This means that while there is a surge of almost 11 percent in arrivals, they are spending less, at least during the first two months of the year.
Nevertheless, the steady growth in arrival numbers is translating to steady property demand, still biased toward high-end developments, but with more growth in the mid-range and economy segments.
Pinnacle Research said that there are more than 20,000 deluxe hotel rooms in Metro Manila at present, with the city seeing more foreign brands, such as the Conrad Hotel in the SM Mall of Asia complex, operated by the Hilton Group.
Conrad Manila has a 24-hour fitness center, an infinity swimming pool, a pillarless Grand Ballroom, an outdoor function space overlooking the city, and it has 347 stylish guest rooms and suites with state-of-the-art amenities.
The Okada Manila of Tiger Resort, Leisure and Entertainment Inc. is carved in 44 hectares of picturesque oceanfront and is set to become Entertainment City’s iconic integrated resort.
In addition, top developers are beefing up their local brands. The Robinsons Land Group has been expanding its Go Hotel operations.
Ayala Land Group is rolling out its Seda brand. The Vista Land Group intends to open six hotels under the Mella brand.
Even the second tier Eurotower Group has been ramping up its operations of the Sogo and Eurotel branches. Additionally, the relatively new Vivaldi Cubao in Araneta Center has also been well received.