Residential opportunities amid Omicron
Colliers Philippines believes that the property market is likely to rebound this year. The pandemic has disrupted the property sector’s key segments including office, residential, retail and hotel, but we are optimistic that certain sectors will start to see green shots of recovery over the next 12 months.
For the residential market, we have outlined some recommendations on how developers can seize opportunities in the market and prepare for a recovery in demand beyond 2022.
HIGHLIGHT ADVANTAGES OF LIVING WITHIN CBDS
To entice potential clients to invest and stoke demand in the pre-selling market, Colliers encourages developers to highlight the advantages of living in condominiums within central business districts (CBDs).
Given mobility restrictions caused by COVID-19, living within CBDs provides convenience through proximity to offices and retail establishments including those that offer health services. CBDs are also near infrastructure projects which could potentially raise land and property values. This should make condominium units attractive to investors.
IMPROVE AMENITIES IN UPCOMING PROJECTS, RETHINK DESIGN AND LAYOUT
Colliers has observed that most condominium developers have upgraded their amenities to adapt to the new normal.
Some provide flexible workspaces with stable internet connection for those who need to work from home and those with kids doing homeschooling. Other features include the use of QR codes for user log in to avoid virus transmission; and apps for payments and updates. Developers should highlight having reputable property managers who ensure compliance to safety and health protocols.
MONITOR COMPLETION IN SUBMARKETS WITH HIGH VACANCIES, OPPORTUNITIES IN FRINGES
In the third quarter last year, we recorded an overall vacancy of 17.6 percent in Metro Manila. We recommend that developers reassess their development plans in submarkets with high vacancies, driven by a substantial ready-for-occupancy (RFO) units.
Developers should explore opportunities in fringe areas viable for new developments. Over the last several years, we have seen aggressive launches and take-up in areas outside major business hubs such as Caloocan-Malabon-Navotas-Valenzuela (Camanava) corridor, Pasig, Quezon City North, and Manila South.
INNOVATIVE PROMOS FOR PRESELLING
In the first nine months last year, Colliers recorded a net take-up of 7,900 units in the pre-selling market, marking a 70 percent decline from the 26,200 units taken up a year ago.
To recapture demand, developers continue to offer promos and flexible payment schemes. A number of developers are offering lease-to-own terms for their RFO units. Other common offerings include no spot downpayment terms, zero percent interest on downpayments for up to five years, discounts of up to 20 percent on total contract prices, among others. Some also bundle these promos with gift vouchers, jewelry, appliances and parking slots. We encourage developers to be more innovative with their promos.
HIGHLIGHT DEVELOPMENTS OUTSIDE METRO MANILA
Colliers Philippines has been seeing an aggressive landbanking initiative from major developers. This is evident not just in Metro Manila but also in nearby provinces including Pampanga, Bulacan, Cavite and Laguna.
Colliers is also optimistic with the market’s recovery prospects given the major infrastructure projects being implemented by the government. These include MRT-7, expected to be completed this year, and the Mega Manila International Airport, due for completion in 2025.
Colliers Philippines’ next property briefing is on Feb. 9. Please join us as we will share our 2022 property updates, data-supported insights and recommendations for investors and developers. Please e-mail jefferson. cubar@colliers.com for the registration link