THE impact of the coronavirus disease 2019 (Covid-19) pandemic on the housing sector, particularly when it comes to the construction pace of vertical projects, has been cushioned by the mid-income up to luxury segments in the first nine months of 2020 as they partook 89 percent of total launches and covered 85 percent of overall sales in the pre-selling market during the period in review, according to Colliers Philippines.
In its latest Philippine Property Outlook report, the company bared that both categories accounted for 68 percent of the total sales take up in the National Capital Region (NCR) for the past couple of years prior to their completions. Given this, they are expected to prop up the demand in the residential market this year.
Data from the company also showed that projects in these segments targeted for completion from 2021 to 2022 have already sold an estimated 86 percent of their inventory as of the third quarter of last year.
To leverage on pent up demand, developers are advised to keep on offering flexible payment terms and adopt property technology channels, including virtual reality tours and automated communication platforms for tenants and property management providers.
Amid the encouraging take-up on these housing sectors, Colliers adjusted its estimate that only 6,000 condominium units will be delivered in 2020, or 59 percent lower than its initial projection of 14,720 units, mainly due to delays in construction following the government-imposed lockdowns.
Nevertheless, 2021 will see an uptrend as it approximates 7,270 new units will be finished, up 21 percent year-on-year. About 76 percent of the new supply this year will come from the Bay Area, followed by Fort Bonifacio, Alabang, Ortigas Center and Makati.
Colliers sees a drop in vacancy rate in the secondary market from 15.3 percent in 2019 to 13.5 percent last year on the back of robust overseas Filipino workers remittances, lower mortgage rates, recovery of office leasing, and the potential increase in absorption from end-users and investors next year.
Starting in the second half of 2021, prices and rents are seen recovering due to improved office space take-up. Colliers expects price points and lease rates to expand by 1.7 percent and 2.1 percent, respectively, by the end of this year, opposite the -13 percent and -7.7 percent in 2020.
Attractive price segments and locations must be a priority of condo builders for pre-selling developments, the firm hinted. From January to September of last year, about 48 percent of mid-income projects that were sold then were located in Parañaque, Pasig, and the Alabang-Las Piñas area. The bulk of upscale to luxury projects that were purchased during the time, on the other hand, were in Parañaque, Bay Area, Ortigas Center and fringe, and the C-5 Pasig corridor.
The property consultancy firm, meanwhile, found out that horizontal developments outside of NCR enjoy a stable patronage, specifically in Pampanga, Cavite, Laguna and Batangas despite the health crisis. It said: “Investors are likely looking for homes offering larger living spaces, open areas, and outdoor space. In our view, developers should continue to highlight both their vertical and horizontal projects outside of the capital region to cash in on the demand.”
Developers ought to discover alternative sites for their house and lot and lot only projects, Colliers noted. It added that they have to look for old structures within the cities or nearby areas to redevelop into integrated communities since investors and end-users consider immediate access to essential goods and services when acquiring properties.
“Residential developers planning to capture the demand outside Metro Manila should implement strategic landbanking and follow the infrastructure projects lined up by the government and are due to be completed beyond 2022,” Colliers said in the report. “The developers should also be more proactive in touching base with overseas Filipino workers [OFW] that fuel the demand for residential units outside Metro Manila. These house and lot and lot only projects are primarily end-user demand driven and are likely to benefit from a sustained demand from OFWs.”
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