High-end residential segment will continue to flourish in 2024 especially as Manila leads the world in prime residential price growth at 21.2 percent the past 12 months, according to Santos Knight Frank (SKF).
In a press conference last week, Rick Santos, chairman and chief executive officer of SKF, said further growth in the residential market in general is expected in 2024 not only in Metro Manila but also in provincial areas as infrastructure projects continue to be built.
“For Metro Manila residential outlook in 2024, we expect to see further growth while in provincial areas, infrastructure will continue to drive demand,” Santos said.
He added: “Housing prices continue to pick up across the Philippines. The price of condominium units inched up across by 5 percent. Property prices in Metro Manila increased about 15.4 percent,” Santos said.
‘The luxury residential space is one of several sectors where we’re seeing encouraging market activity.’
High net worth individuals
But he said persistent demand is seen from high net worth individuals due to the high interest rates in most markets, prompting some of the major investors and players to pick up big ticket assets in the Philippines.
“If you go into high- end properties, whether it’s in Bonifacio Global City (BGC) or in Makati or Forbes (Park) or Dasmarinas (Village) or San Lorenzo (Village) or some of the high- end villages in Ortigas, that sector is pretty resilient,” Santos said.
He said developers are also now strategically looking at joint ventures with branded luxury projects to expand their portfolio, seeing the need for overseas connections as they cater to discerning preferences of high-end homebuyers.
Santos said price movements in Metro Manila are buoyed by the high- end sector.
“Tight supply of luxury developments in Metro Manila… will continue to put pressure on prices,” he said.
Santos said the resurgence is not just from investors, but also from end-users.
“International schools have come back in, so three-bedroom condos are in short supply in BGC and in the surrounding areas. ADB (Asian Development Bank) has brought all their staff back, multinationals have brought their crews in. You also see a lot of other players…we are seeing more power companies,” he said.
A shot in the arm
Santos said Manila overtaking Dubai on price growth as shown in Knight Frank’s Prime Global Cities Index should be a shot in the arm of confidence for a lot of the high-end developers.
Some of Manila’s most expensive residential developments, including branded ones, are at a price range of P310,000 to as high as P800,000 per square meter.
Outside Metro Manila, buyers go to Pampanga, Cavite, Batangas, Laguna, Tagaytay and Bulacan due to the advent of infrastructure and the establishment of satellite cities and hub and spoke centers in these areas.
During the pandemic, SKF conducted a survey which revealed 41 percent of respondents are more than likely to buy a second- home.
“We now see a growing demand for homes in Metro Luzon which is driven by both the strong appetite for second homes,” said Santos, adding there is a strong potential in leisure destinations like Siargao, La Union and Zambales for holiday or vacation homes.
Hawaii of Asia
According to Santos, in the old days, Manila was considered the Hawaii of Asia with Roxas boulevard as its own version of Waikiki.
“Returning overseas Filipinos start embracing the beach life. This poses a huge potential for the Philippines,” Santos.
Outside of Metro Manila, SKF said there are two categories of condominium developments: the traditional ones in the urban areas, and the leisure developments in tourist destinations like Tagaytay and Nasugbu.
SKF said as of the third quarter, 41 percent of condominium units sold in Luzon were leisure developments. These leisure condominiums are typically located in tourist destinations such as Tagaytay, and Batangas.
The remaining 59 percent of take up are traditional condominium units in urban areas in Luzon, an evidence of the growth of the vertical development market in cities in regions such as Cavite, Batangas, Laguna, and Pampanga.
For condos, the high-end market prefer two- or three- bedroom units measuring 250 to 350 sq.m. I BGC, Makati and Rockwell.
“We see that an increasing number of takeout in residential leisure development units,” Santos said.
According to Santos, overseas Filipino professionals remain a solid market for this segment.
In fact, leisure condos account for 48 percent of take up in Metro Luzon, signifying strong appetite for second homes
“The luxury residential space is one of several sectors where we’re seeing encouraging market activity. Pent-up demand for prime properties, the return of the residential leasing market, and the tight supply of developments have contributed to significant price appreciation especially in central business districts,” Santos said.
