“We’re in a period of transition”
When John Forbes, senior advisor to the American Chamber of Commerce of the Philippines, caused a stir in January when he announced that Metro Manila could become uninhabitable in four years due to unresolved congestion and infrastructure problems. However, few residents of the capital could fail to recognise his inference.
Soaring residential prices aren’t making the sprawling capital any more attractive. In Makati, the financial centre of the Philippines, existing mid-end residences cost up to PHP160,000 (USD3,424) per sqm, while high-end homes can sell up to PHP280,000 (USD6,000) per sqm, according to January 2016 estimates released by Cushman & Wakefield.
At the highest end of the scale is the Daniel Libeskind-designed Century Spire in Century City, Makati, slated for completion in 2018. Prices at the mixed-use luxury residential tower can reach up to PHP171.1 million (USD3.7 million) per unit.
Still, residential prices in Metro Manila remain competitive compared to similar economies in Southeast Asia. They come in at around 20 percent lower than Bangkok and just about 15 percent higher than Jakarta.
Sigrid Zialcita, managing director at Cushman & Wakefield, notes that rental yields are still on average higher than those in the Indonesian capital. “Once we factor in Philippines’ all-round macroeconomic fundamentals, which are healthy, the story gets even more compelling,” she says.
Zialcita adds that Metro Manila will likely retain its position as the economic and real еstatе hub of the country. But like in any election year, it can be expected that property investors will adopt a “wait-and-see” stance, resulting in a slight uptick in investment activity in the second semester.
“We’re in a period of transition,” explains Julius Guevara, director of research and advisory at Colliers Philippines. “Since the market’s peak in 2012, sales of condominiums in Metro Manila have slowed down from about 50,000 units to between 30,000 and 32,000 units at the end of 2015.”
It’s a significant dip, but Guevara points out that it’s simply a result of aggressive investment activity in the last few years. “It’s just we had a bull run for such a long time, and investors are still waiting for their units to be completed. They’re also waiting for some rental revenue to come in before they make their next decision.”
For the time being, homebuyers are looking at more affordable areas of the capital to make their investments. Quezon City, which offers average prices at PHP110,000 (USD2,354) per sqm, is now the most popular area among online property seekers according to mass-market property portal Lamudi.com.ph.
Investing in Metro Manila real еstatе
Pros: Financial and cultural capital; modern amenities and attractions; emerging global city
Cons: Congestion and infrastructure problems; high crime rate; affordable housing shortage
What to buy in Metro Manila for…
Luxury: Century Spire
Developer: Century Properties Group
Size: 70 sqm (avg.)
Price: PHP37.6 million (USD802,000) (avg.)
Distinguishing features: Designed by Daniel Libeskind in collaboration with GF & Partners, Century Spire exteriors have three interlocking geometric segments that resemble a blooming flower, while the interiors feature designs by Armani Casa