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Residential Property Outlook After the First Quarter of 2022
May 4, 2022 by Martin Luigi Lagustan
Before you decide to put your condo up for sale or lease, you have to know how the current residential market is doing and the Philippine economy as well amidst the surge of face to face activities. Luckily, Colliers just submitted its most recent data for the first quarter of 2022 for the residential property outlook. Read this article to learn more about real estate markets situation, their recommendations and where you should buy a house or condo.
Colliers Q1 Report and Recommendations for Residential Real Estate
Colliers, a leading professional services and investment management company, recently published its quarterly market report for residential real estate for the first quarter of this year. In this report, they stated some of the most insightful recommendations and data that will help you see how you should invest in residential real estate. Here are the things that they said:
A moderate flow of new supply in the residential market
Colliers projects about 10,500 new units by the end of the year, as new projects conclude in Ortigas Center, the Bay Area, and Fort Bonifacio. These combined will account for 85% of the new supply of residential units to answer the residential demand for this year, which should be 20% more than the previous year-on-year.
However, in the first quarter, Colliers found that only 560 units — from the completion of the Proscenium Residences in Rockwell Center — were completed as the Proscenium Residences in Rockwell Center were finished. Even so, they are still optimistic that the 10,500 mark will be reached by the end of the year, as about 88% of the Bay Area projects will come from four towers by the SMDC Shore 3 Residences condominium units.
Vacancy to decline in the second half of the fiscal year for the real estate market
Overall vacancy in the Metro Manila residential market dropped this first quarter of 2022 — from 17.9% a quarter ago down to 17.8%. This may not seem like a lot, but this is the first-ever drop in vacancy rate after eleven uninterrupted quarters of increased vacancy rate.
A decrease in vacancy rate is great because that means people want to live in an area or building. A low vacancy rate means there are more occupied units, which could be something you can take advantage of if you’re thinking of setting up your condo for sale or buying a condo and having it for rent.
Colliers expects the vacancy rate to go down to 17.2% by the end of the year because office leasing has been recovering because of the recent increase in return to office (RTO) businesses. This is because of the order from the Fiscal Incentives Review Board (FIRB) that required 100% on-site work from the BPO industry. Not to mention, international travel has also been relaxing, which means more expats may move back to the country.
Moreover, the Bangko Sentra ng Pilipinas (BSP) also released its first-quarter Business Expectation Survey which reported that the business outlook in the Metro has improved from 20.1% to 35.7%. Additionally, the BSP projects that cash remittances are to increase up to 4% by the end of the year, with most OFW households using their remittances for house purchases. For this reason, developers are encouraged to promote their projects to OFW families.
Rents and residential property prices will recover
Rents in the secondary market (a market where investors buy assets from other investors) declined by 0.2% quarter-on-quarter this first quarter of the year. However, Colliers saw prices beginning to recover, with an increase of 1.2% quarter-on-quarter. They are optimistic that rents and prices will increase by 1.5% and 2.7% respectively by the end of the year.
As employees return to traditional and blended work settings, the residential leasing market and residential developers should recover this year. Based on Colliers’ fourth quarter Office Survey last year, 42% said that their companies are requiring 75% to 100% RTO, which can encourage their employees to rent condos, apartments, or co-living facilities that are close to their work area.
Landlords should improve amenities and value-added features
The survey of the IT and Business Process Association of the Philippines (IBPAP) and the overall market sentiment found that about 90% of employees work better in a hybrid model. Because of this, Colliers recommends developers and rental property owners improve amenities to better suit the work-from-home setup.
Just recently, DMCI introduced a co-working space in their Lumiere Residences during the pandemic to attract more residents. This workspace is fully equipped with high-speed internet, printers, photocopiers, and virtual mailboxes — all exclusive for registered tenants and residents of the condo.
Colliers also encourage developers to integrate green technologies to set their projects apart in the market. Examples of green technologies include optimized air quality, natural lighting, rainwater catching facilities, and other sustainable features like vertical gardens.
Take advantage of rental corrections in major business districts
Colliers found a significant decrease in rent prices for 1BR and studio units compared to pre-pandemic rates in Central Business Districts (CBD), including Fort Bonifacio, Ortigas, and Makati. Tenants who want to live near their offices or businesses who want to expand in these areas should take advantage of these prices.
For Colliers, RTO should encourage employees to live in these CBDs, improving the demand for residential leasing in these locations. If you have a ready-for-occupancy (RFO) condo for sale in CBD areas, you might consider putting it up for lease instead and offer attractive terms to generate a continuous flow of profit. The same goes for developers who want to attract more tenants in these areas.
Explore areas viable for residential development
Finally, Colliers encourages developers to explore the outer edges of an area for residential development. This is because they saw strong pre-sales in submarkets last year in fringe areas like Alabang-Las Piñas, Manila North, and Caloocan-Malabon-Navotas-Valenzuela (CAMANAVA). These areas accounted for 82% of affordable-to-mid-income projects last year.
Additionally, Colliers recommends developers to look for developable land in the Bay Area and Makati CBD because demand for condos in these areas increased ever since Metro Manila eased pandemic restrictions down to Alert Level 1. According to Lamudi, leads for residential rents in Makati alone increased by 40% in the first quarter of this year.
Best Locations to Buy a Condo or House
As prices for residential properties are getting more attractive, you should take advantage of this before you run out of opportunities. While most of Colliers’ recommendations are for CBD areas, you might be looking for someplace where you can raise your family in a quiet, comfortable area not too far from the city. Here are some of the best locations where you should buy a house or condo for sale:
Mandaluyong City is considered to be “Metro Manila’s Heart” as it rests in the center of the metro. It is extremely accessible and practically near everywhere in Metro Manila — be it for commuters and car owners alike. Living here means you have quick access to Rockwell via Rockwell Bridge, Ortigas via Shaw Boulevard, Makati Poblacion via Makati-Mandaluyong Bridge, and other major cities via EDSA.
This city is one of the leading business and industrial centers, perfect for both commercial and residential investments. For families, Mandaluyong is great for raising kids because while it is in the middle of big CBD areas like Makati and Pasig, it still has a great and quiet residential area. On top of that, the city is relatively safe, as a city ordinance requires all businesses to have CCTV cameras and alarm systems on their premises.
Moreover, Mandaluyong is near the top 100 colleges and universities, including Rizal Technological University, Don Bosco Technical College, FEU Makati, Mapua Makati, and Jose Rizal University.
Being in the less busy part of the Bay Area, Las Piñas is a great city to live in because it’s accessible to big cities like Pasay and Parañaque but also provinces like Cavite and Laguna. It rests in the middle of Parañaque and Bacoor, Cavite, giving you the choice to live a busy city life or a slow and quiet provincial life with your family.
Additionally, Las Piñas is one of the least polluted areas in Metro Manila, having a good air quality index according to IQAir, a leading organization that provides information about air quality and how to improve it. Because really, no matter how “used to it” you say you are, you can’t deny that breathing light air feels so good.
Its cleanliness and peaceful residential area are perfect for raising families, so what more if you buy a premium condo for sale in Las Piñas, right?
Hermosa is one of the best condos to live in as it is near the Bay Area and NAIA, but not near enough for you to feel the noise and chaos of the big city. It is part of the township called Vista City Global South, which will be a development that combines residential, commercial, retail, and entertainment establishments in one area.
The condo itself is a modern-exclusive resort-style condo village with a lot of attractive amenities, including a lounge swimming pool, fitness gym, and a pet park. Moreover, it is accessible via C5 Southlink, LRT Las Piñas Station, and CAVITEX.
Laguna is one of the fastest developing provinces in Luzon, with its farthest point only two hours away from Metro Manila. While being near the metro, it is still a province so it has a considerably lower cost of living compared to the big city — all while having the same quality of life (maybe even better) that the metro offers.
The best thing about Laguna is while it is continuously being developed, it preserved its natural surroundings by incorporating greenery into its developments. Best of all, Laguna has a lot of towns or municipalities where you can live, giving you the option to live in a far provincial area or an urbanized city.
This province has 24 towns and cities, ranging from component cities, and first to fifth class municipalities. Component cities include Biñan, Cabuyao, Calamba, San Pablo, San Pedro, and Santa Rosa. Living in these cities gives you the best quality of suburban living, most especially in San Pedro and Santa Rosa.
One of the most exclusive and premium communities in San Pedro, Laguna is La Marea. It is a Southern American-inspired community with house and lot properties that will remind you of American country living. Luxury residential properties in this community are perfect for families, as they are spacious and near patches of nature for excellent air quality. Not to mention, living in San Pedro means you’re only a few minutes away from Alabang.
If you’re looking for city life that is a little disconnected from the metro, Santa Rosa offers some of the most upscale Italian-inspired communities, Valenza. This is an exclusive luxury community where you can expect both serenity and security, all while having access to the highly urbanized city of Santa Rosa. Living in Valenza means you get access to a great environment for your kids, complete with a swimming pool and a clubhouse, laced with beautiful pocket gardens, statues, fountains, and walkways. Valenza offers houses and lots, lots only, and RFO and NRFO properties.
If you want to be near the convenience of living in the metro without actually living in it, Cavite is your best bet. It rests just south of Metro Manila, with the nearest municipality being Bacoor, which is just south of Las Piñas and beside Muntinlupa. Not to mention, it is also close to other developed provinces like Laguna and Batangas.
Because of its location, Cavite is ideal for starting a family or raising kids, because you get to be close to work in Metro Manila while enjoying the peaceful life away from the city. It’s also relatively cooler in Cavite, as it has a lot of green spaces, especially if you live close to Tagaytay City.
Best of all, real estate in Cavite is low compared to Metro Manila. Because of this, Cavite has become a real estate hotspot, offering properties between low-cost housing to high-quality homes.
As for cities, the best areas to live in are Dasmariñas and Bacoor because of their accessibility and commercial offerings.
If you’re looking to live in Dasmariñas, you can find premium properties in Caribe at The Island Park, which is a Caribbean-inspired community. It offers numerous amenities, including a tennis court, clubhouse, swimming pool, and playground.
Meanwhile, Bacoor has the same level of luxury as the RFO house and lots in Carmel. This community is perfect for families, as it is accessible to schools like De La Salle University, University of Perpetual Help Molino, British International School, and more.
Overall, 2022 is a great year to buy a residential property, whether you want to live in Metro Manila or the province. Make sure you take advantage of this opportunity while it lasts!
Related Blog: Why Buying a House and Lot Property is Your Best Move This 2022