PH Commercial, Residentials Markets Rise Above Pre-Pandemic Levels
According to Leechiu Property Consultants' (LPC) latest June 2022 report, capital prices and interest in important commercial districts have risen above pre-pandemic levels, with transactions in BGC and Filinvest City reaching new highs.
Photo Insert: Overall, Philippine real estate remains a growth story, buoyed by high capital values, voracious residential investors, and an office market anchored by the IT-BPM sector.
Alvin Magat, Director of Investment Sales, stated that Filinvest City has the fastest growth rate among Metro Manila commercial areas, with a Compound Annual Growth Rate (CAGR) of 20% over a six-year period.
Core CBD capital values have held up well over the last five years, with CAGRs ranging from 9% to 20%.
Tam Angel, another Director of Investment Sales at the firm, observed that with the economy expected to rise up to 8% this year and inflation expected to be 5%, investors who get in early will be able to ride the estimated post-pandemic surge in land values.
Meanwhile, residential condominium sales increased by 54 percent from Q1 to Q2 2022, according to Roy Golez, director of Research and Consultancy. Demand increased significantly in most divisions as developers provided longer and more flexible payment terms and investors purchased residential units to lock in current prices.
The lower middle section defied the trend, falling by 89 percent, as buyers at that level chose to prioritize purchasing essentials over the security of home ownership. New product introductions were also slowed by 78 percent due to risks such as rising interest rates, inflation, and construction material procurement challenges caused by lockdowns in supply nations.
With inflation in emerging and developing economies forecast to reach 8.7 percent in 2022, the Bankgo Sentral is expected to raise interest rates by up to ten percent. “Such a development may impact not only the lower middle residential condominium segment but also the middle-income category now also being confronted by looming economic headwinds,” Golez says.
These developments, however, have not depressed residential lot prices, particularly in Southern Metro Manila, which has become more accessible due to new expressways and other infrastructure.
Lot values in these locations have been continuously increasing at a rate ranging from 7% to 15% each year. Property at Rockwell South, which launched in 2019 at P35k/sqm, has been one of the top gainers. and have recently increased by 52 percent to P53.1k/sqm.
Overall, Philippine real estate remains a growth story, buoyed by high capital values, voracious residential investors, and an office market anchored by the IT-BPM sector.
“As the economy opens up, we are confident that transactions – especially in the office sector-- will pick up driven by firms that will use outsourcing in tough times," said Mikko Barranda, LPC's director of Commercial Leasing, highlighting further that "The IT-BPM sector is a unique Philippine industry that thrives when everyone else in the world struggles to stay afloat."