Overcoming headwinds, maximizing tailwinds
(First of two parts)
THERE are several opportunities in the Philippine residential market that developers should start capturing.
Colliers Philippines is seeing several trends in the residential market, whether in the pre-selling or secondary segments. We are still far from the pre-coronavirus disease 2019 (COVID-19) level of Metro Manila prices and rents but the residential market is definitely rebounding.
We are now seeing the return of more expatriates, signaling a recovery of the leasing market in Metro Manila. In the pre-selling sector, the take-up in the first half of 2023 improved by 52% year on year while launches rose by 70% year on year.
Interest from local investors is picking up as reflected by improving consumer and business sentiment across the country. Developers remain cautiously optimistic and continue to be strategic with their launches. Housing summits are back, which only indicates that developers are starting to test the market’s overall appetite for new residential projects.
HIGHLIGHTING FEATURES THAT CATER TO BUYERS’ POST-COVID PREFERENCESThe results of our third quarter 2022 residential survey showed that 83% of respondents prefer condominium projects that offer good ventilation as well as more green and open spaces.
Developers should consider incorporating amenities that will allow residents to work from home or multi-task, such as co-working spaces and business amenities including function rooms and business lounges, as well as smart home systems.
Overall, more than 90% of respondents believe that having green and sustainable features are important in a residential development.
We encourage developers to consider integrating features such as water recycling and treatment facilities, sensor lighting, solar panels and pocket gardens to capture the demand from discerning buyers looking for innovative and sustainable features. In our view, these features are important in differentiating residential projects in the market.
SECURING GREEN BUILDING CERTIFICATIONS FOR RESIDENTIAL TOWERSColliers encourages developers to consider securing green building certifications such as Leadership in Energy and Environmental Design (LEED) or Building for Ecologically Responsive Design Excellence (BERDE) for their condominium and horizontal projects.
In our view, adopting green and sustainable features will play a crucial role in future-proofing not only office towers but also residential developments within and outside Metro Manila post-Covid.
EXPLORING JOINT VENTURE DEALS IN LAUNCHING UPSCALE TO LUXURY PROJECTSWe recommend that property firms seize opportunities in the market by partnering with foreign developers for the development of more luxury projects. In our view, these joint ventures (JVs) should help local players differentiate their projects in the market.
Developers should also emphasize the JV projects’ upscale amenities, integrated development features, topnotch concierge services, and strong potential for capital appreciation, which are important considerations for discerning investors and end-users.
EXPANSION FROM CITIES TO SUBURBSMore and more investors and end-users are willing to gravitate from the cities to the suburbs. We have seen people who own condominium units in Metro Manila expressing interest in purchasing horizontal units outside central business districts (CBDs), particularly in central and southern Luzon.
Since the start of the pandemic we have seen a spike in demand for resort or leisure-themed horizontal projects. We see this trend persisting beyond 2023 as more Filipinos choose to feel the suburban vibe.
With this trend, we see the demand for resort-oriented residential projects outside of Metro Manila thriving. As a result, developers have aggressively launched new house-and-lot and lot-only projects outside of Metro Manila as they seize this growing demand from end-users. Expect more masterplanned communities in the fringes as connectivity in key regions improves.
(To be concluded next week)
Joey Roi Bondoc is the research director for Colliers Philippines.