Demand for residential condominiums in Metro Manila demonstrated resilience in the third quarter of the year, according to Leechiu Property Consultants (LPC).
In a report, LPC said the number of units pre-sold during the quarter stood at 10,057 which is an increase of 15 percent from the previous quarter. But LPC said new project launches were down 11 percent.
LPC said this could be an indication that developers are exhausting remaining inventory before introducing new projects to the market.
The sales takeup for residential projects still achieved healthy levels, according to LPC although it did not provide numbers.
It said this was achieved even in the absence of flexible payment terms.
According to LPC, residential condominiums, mostly located within the central business districts (CBDs) of Metro Manila remain highly sought-after due to the convenience they offer as these provide proximity to facilities, such as office spaces, retail establishments, schools, and government agencies. However, the issue of traffic congestion in Metro Manila continues to plague commutes, especially when traversing between districts.
Consequently, there has been a robust increase in prices within the CBDs, LPC said.
According to LPC, early pandemic buyers reaped the benefits of the appreciating capital values of their units, and developers continue to rely on the promise of value appreciation as a key selling point for their projects.
It cited existing projects in Bonifacio Global City (BGC) have compound annual growth rates of 8.2 percent, while those in Makati City have rates of 6.9 percent in the past five years.
LPC said the continued capital appreciation of vertical developments currently weighs down on potential yields as rental rates remain stagnant in Metro Manila.
Over the last quarter, the average gross yields for rent in BGC declined from 4.2 percent to 4 percent, and in Makati City, from 4.6 percent to 4.3 percent.
“As the return-to-office trend gains momentum in the forthcoming quarters, rental rates are expected to increase to match the rising capital values, making yields more stable,” LPC said.
Citing data from Bangko Sentral ng Pilipinas, LPC said real estate loans granted to finance purchases of low density horizontal residential projects outside the National Capital Region (NCR) are at significantly higher levels than for residential condominiums within NCR.
The heightened demand for such residential projects was evidently enhanced by the pandemic, driven by the need for individual living spaces and more spacious accommodations.
“This brought the residential property market to a crossroads, as we witnessed the upswing in demand for both horizontal and vertical developments. Potential buyers carefully considered the advantages and disadvantages of each type, which resulted in an increased demand for both in the third quarter,” LPC said.
In the report, the consultancy firm said low density projects located on the outskirts or outside of Metro Manila boundaries flourished with the proliferation of townships that boasted development standards comparable to those found in CBDs in NCR.
LPC said the rise of these townships was enhanced by infrastructure projects that eased travel time to and from Metro Manila. Consequently, there has been a robust increase in prices within these districts.
Early pandemic buyers reaped the benefits of the appreciating capital values of their units, and developers continue to rely on the promise of value appreciation as a key selling point for their projects.
Accrording to LPC, developers are taking note of the robust presales performance of residential condominiums in Metro Manila, and are further encouraged by the strong sales and rising property values of townships outside
the NCR.
“In the future, we are likely to see developers’ portfolios containing a combination of both high-density verticals in the city and horizontals in provincial areas,” LPC said.