Thriving locations outside Metro Manila
Cebu remains an ideal property investment hub given the size of its economy as well as rising disposable incomes of residents. Cebu is also a viable property investment hub given its competitiveness. It has always been on the radar of foreign investors. In fact foreign property investors in hotel, residential, and industrial sectors have invested in Cebu. Some of the most expensive residential units outside of Metro Manila are found in Cebu.
Outside of Metro Manila and Cebu, other fastest-growing investment locations include Pampanga, Bulacan, Cavite, Laguna, Batangas, Tarlac, Bacolod, Iloilo, Davao, and Cagayan de Oro. These locations are in regions that are considered as fastest growing in the Philippines and are major sources of Filipinos being deployed for overseas employment. There are recently-launched residential towers outside of these popular destinations which have also recorded very good take up. Butuan is one example. This indicates that national developers are now looking at emerging sites for residential development, and property firms are aggressively seizing these opportunities.
Infrastructure to buoy prices and rental prospects
Colliers is optimistic that upcoming infrastructure projects should support the property market’s recovery for the remainder of 2024. There are exciting projects in the pipeline and these should play a crucial role in revivifying the country’s property market. I’m not just talking about the residential segment. Infrastructure should benefit other property segments including retail, office, leisure, and industrial.
Among these big-ticket projects include MRT-7 which extends from northern Quezon City to San Jose del Monte in Bulacan; the new Manila International Airport in Bulacan; NAIA rehabilitation, Mega Manila subway, as well as expansion and modernization of airports in Davao, Puerto Princesa, Panglao, and other major tourist destinations across the Philippines. Colliers believes that these projects have substantial impact in raising land and property values in adjacent parcels of developable land.
Colliers Philippines believes that the government-projected rebound in Gross Domestic Product (GDP) over the next few years should partly hinge on the implementation of major infrastructure projects.
In Metro Manila and nearby areas, we have seen how Skyway 3 and the modernization of Clark and Cebu airports benefited the public and businesses.
Ramped up infrastructure implementation augurs well for the Philippine property market. The completion of toll roads, cargo railways, subways, and airports will play a major role in paving the proverbial road to recovery.
In our view, office and condominium developers should maximize their projects’ proximity to these infrastructure projects which are scheduled to be completed in the next 12 to 36 months. The implementation of infrastructure projects nationwide should provide access to properties that could be redeveloped into mixed commercial, residential, and industrial estates. The infrastructure plans of the national government will likely dictate the direction of real estate developers even beyond the Marcos administration.
Interest rate cuts to stoke residential demand
Colliers believes that interest rate cuts will have a positive impact on businesses’ expansion plans and will provide the impetus needed for greater absorption of offices, mall space, as well as industrial land and facilities. This, however, depends on the Philippine central bank’s policy direction. But overall, our view is that interest rate cuts should have a positive spillover impact on the Philippine property. Colliers believes that elevated interest and mortgage rates continue to hamper demand in Metro Manila’s pre-selling condominium sector. In our view, interest rate is among the indicators that developers are closely observing before they launch new projects in the market.
Lower interest rates should also entice more businesses to expand and this should benefit players from all segments of the property sector. Lower interest rates should compel businesses to expand operations and this should have a positive impact on their office space take up. Retailers will likely be enticed to ramp up operations and should also be encouraged to take up physical mall space. Manufacturers should also benefit from lower interest rates and should be encouraged to expand operations and eventually take up industrial space and warehouses. Overall, lower interest rates bode well for the property sector and should play a key role in resuscitating one of the Philippine economy’s major economic segments.
