The results of our latest webinar poll yielded interesting results. More than 300 participants during our August 1 webinar responded to our survey questions.
Akin to the results of a Colliers USA survey conducted in 2019, the majority of our respondents chose malls as ideal locations for flexible workspaces. Half of our respondents prefer free parking space bundled with their flexible workspace lease while more than a third chose F&B vouchers.
Given the precarious pre-selling condominium market in Metro Manila, it appears that developers need to continue offering flexible and extended payment terms to drum up interest in Metro Manila’s primary market, especially with nearly 30% still opting for a condominium unit within a central business district (CBD) as their next residential investment. Outside of the capital region, more than half opted for a beachfront property and Lot only unit. Our survey results also showed the continued vibrancy of the horizontal property segment outside Metro Manila.
Meanwhile, nearly half of our respondents are likely to travel to Palawan over the next three months, outranking other popular destinations such as Cebu and Boracay.
We are seeing an aggressive shift in developers’ strategies. This is likely due to tempered condominium demand in Metro Manila although take-up is recovering outside of the capital region. We see sustained demand for horizontal projects propelled by Filipinos’ growing preference for more open and greener spaces. Office developers are also aggressively tapping opportunities brought about by the popularity of work-from-anywhere. Meanwhile, we see property firms expanding their leisure footprint in emerging destinations across the country.
Drumming up Metro Manila pre-selling condominium
Given the subdued demand in the pre-selling market at the height of the pandemic, developers offered attractive promos and discounts to attract potential buyers and investors, including extended and flexible payment terms. We are now seeing newly-launched condominium projects extending their downpayment terms up to 84 months.
In our view, developers should continue to be aggressive in offering innovative and attractive promos to re-ignite interest in the Metro Manila pre-selling market. At present, the remaining inventory life (RIL) is at nearly five years, much worse than the RIL of about a year from 2017 to 2019. The primary residential market in Metro Manila continues to be hounded by elevated mortgage rates, rising land values, and increasing prices of construction materials. With lackluster demand, it is imperative for developers to be more creative and flexible with their downpayment and early move-in promos.
Sustained appetite for horizontal
About 28% of our respondents chose beachfront properties as their next residential investment. Some property firms are ramping up their differentiation strategy by developing leisure or resort-themed projects. Colliers data showed that these projects were already popular pre-Covid but the pandemic only highlighted the strong take-up for these leisure-centric residential enclaves. These projects have take-up rates of between 40% and 100% with an average price per sq meter ranging from PHP214,000 to as much as PHP590,000 (USD3,800 to USD10,500) as of end-2023.
Some of these leisure-oriented projects are dispersed across Batangas, Cavite, and Cebu. The demand for these projects should also get a boost from the recovery of the country’s travel and tourism sector.
Among the developers offering resort-themed developments are Brittany, Ayala Land, Rockwell Land, Robinsons Land, Torre Lorenzo, Sta. Lucia Land and DMCI Homes.
The strong take-up is partly supported by developers and investors’ more pronounced shift to suburbia.
Horizontal projects also remain attractive. We encourage developers to be on the lookout for viable locations for house-and-lot (H&L) and lot-only projects including provinces in CALABARZON, Central Luzon, Central Visayas, Western Visayas, and Davao region.
H&L projects in these property hotspots recorded an average annual price increase of 4% to 7% from 2016 to 2023. Lot-only developments, meanwhile, recorded stronger price appreciation during the period, ranging between 7% and 15% annually from 2016 to 2023. This only supports our earlier thesis that the appetite for horizontal remains unequivocal.
Thriving tourist destinations
Unsurprisingly, Palawan was the most preferred destination of our respondents (45%), followed by Boracay (17%) and Cebu (16%). Both Palawan and Boracay have been awarded as the third and fourth best islands to travel according to the Travel + Leisure Luxury Awards Asia Pacific 2024.
Colliers believes that hotel operators should remain active in capturing demand from domestic tourists who are enticed by impulse travel as well as foreign visitors. Property firms should explore building either hotels or leisure-centric residential enclaves in popular destinations across the Philippines. Among the developers with leisure presence in Palawan include Megaworld, Ayala Land, and Sta. Lucia Land.
Meanwhile, developers that have resort-themed developments in Boracay, Cebu, and Davao include Brittany, Rockwell Land, Torre Lorenzo, Cebu Landmasters, and Shang Properties.
Colliers believes that the leisure sector will also likely benefit from the new and upcoming public infrastructure projects of the government. The modernization and expansion of airports such as the Panglao, Laguindingan, Zamboanga, Ninoy Aquino International Airport (NAIA), and the New Manila International Airport as well as the development of new roads to emerging tourist destinations will likely entice more long haul and high-spending tourists. This should also support the Department of Tourism’s goal of attaining 7.7 million foreign arrivals in 2024 and 12 million in 2028.
Malls as attractive co-working sites
About 40% of our respondents said that malls are viable locations for flexible workspaces followed by hotels (20%) and cafes and restaurants (19%). In our view, flexible workspace operators may consider occupying space in transit-oriented retail developments to entice more mallgoers to take up flexible workspace. Previously, Colliers highlighted that a number of malls in the capital region are already offering flexible workspaces, exploring the feasibility of these spaces for co-working facilities.
Meanwhile, hotel operators may also consider adding flexible workspaces to complement the accommodation and dining packages that hotels offer to business travelers.
Residential towers are also proving to be attractive locations for flexible workspaces. Developers with new launches should start offering these to potential buyers. Property firms with existing projects should consider allocating flexible space to residents.
Which promo would you like to be bundled with your flexible workspace lease?
More than half of the respondents said that having a free parking space in a mall will likely lure more consumers to avail of flexible workspaces followed by free F&B vouchers.
Colliers previously highlighted that flexible workspace operators may partner with in-mall retailers such as gyms, restaurants, and cinemas to add value to their services and lure more mallgoers to sign up for co-working space leases.
Over the past 12 months, we have seen expansion from operators such as Regus, KMC Solutions, WeRemote, and Figari within and outside Metro Manila. In our view, the co-working space segment has been benefiting from the work-from-anywhere scheme being implemented by private firms. Now is an opportune time for mall operators to consider housing co-working operators within their retail centers.
