Key demand drivers for the Philippines residential real estate market

Property developers and owners are encouraged to monitor the market’s changing demands 

According to property consultancy firm Colliers, the Philippine real estate market is starting to show signs of recovery as developers switch up their marketing tactics and as opportunities for property buyers rise across different sectors. 

In Q4 2020, the pre-sale market take-up reached 6,000 units, a 53 percent decline from the 12,900 units in Q4 2019. This descent prompted developers to introduce an array of promotions to entice buyers. 

Developers in Mandaluyong, Manila, and Pasig offer market discounts ranging from three to 16 percent. Others provide lower reservation fees, split or zero downpayments, and free items, like gadgets, furniture, or appliances. 

OFWs lead as major homebuyers in the Metro  

Affordable to mid-income condominium transactions (USD34,000 to USD119,800) surged in Metro Manila during the first quarter of the year, primarily driven by remittances from Overseas Filipino Workers (OFW).

Colliers believes that developers — including Wee Community Developers, Inc., Metroworx Properties, Inc., Robinsons Land Corporation, and other PropertyGuru Philippines Property Award-winning developers — will continue to cater to this market. 

The firm also advised developers to keep an eye on the pandemic situation from major sources of remittances, namely the United States, Saudi Arabi, and Singapore that accounted for 50% of total remittances from January to February 2021. 

Manilastandard.net added that home loans reached a new high during this time, with the Home Development Mutual Fund or the Pag-IBIG Fund recording a total of USD 1.38 billion worth of loans released from January to April 2021.  

Opportunities in JVs and luxury developments 

In the report, Colliers stated that luxury projects often receive the least impact during an economic downturn, while joint venture projects between a local and a foreign company are normally the most expensive in the market for these come with cutting-edge amenities and facilities. 

Yet even though these types of developments are sold in a higher price range, the median take-up hit 85 percent in the end of 2020. 

“Philippine developers should seize opportunities in the market by further exploring partnerships with foreign firms,” urged Colliers. “We expect more luxury projects to be launched in the market, and these are likely to include joint venture developments.” 

Fringe areas to watch out for 

In the past few years, developers have begun to consider constructing in fringe areas to accommodate their need to develop additional projects. A survey conducted by the consultancy firm in February 2021 discovered that over 70 percent of respondents intend to develop a property in the Mandaluyong and Alabang-Las Piñas areas in the next 12 months. 

In 2020, the said areas made up for 21 percent of the overall take-up for mid-income to luxury projects. The peripheral areas were also a hotbed for new developments with the continued launch of new projects by PropertyGuru Philippines Property Award-winning developers SM Development Corporation and DMCI. 

With residential developers examining the feasibility of new project launches in major areas across the country’s capital, the firm expects a recovery in new residential supply in 2021. 

Know of any award-worthy homes, condos, flats, or other real estate projects in the Philippines? Nominate them for the 9th Philippines Property Awards on or before 20 August 2021. Simply visit asiapropertyawards.com/en/award/philippines-property-awards for more details. 

Gynen Kyra Toriano, Digital Content Manager at PropertyGuru, wrote this article. For more information, email: [email protected].