Key Insights from the Philippine Real Estate Q2 Quarterly Trend

The real estate market in the Philippines has always been dynamic and ever-evolving. As developers and investors, it’s crucial to stay up-to-date with the latest trends and insights to make informed decisions.

In the Philippines, companies like Colliers and Lamudi provide an annual report to offer insights and analysis on the residential property market trends, conditions, and developments in the country. These reports are valuable resources for investors, developers, and other stakeholders in the real estate industry to stay informed about the market’s performance, emerging opportunities, and potential risks.

In this article, we will delve into the key takeaways and insights about the Philippine real estate market, which can help in making informed decisions, identifying market trends, and understanding the factors that influence the residential property market in the Philippines.

Key Takeaways About the Philippine Real Estate Market

The Philippine Real Estate Q2 Quarterly Trend Report reveals several noteworthy insights about the current state of the market. These concerns supply and demand, rent prices, vacancy, and capital values/yields.

Insights on Supply and Demand

The demand for pre-selling condominium units in Metro Manila increased by 52% year on year, with a total take-up of 15,200 units in the first half of 2023.

The lower and upper mid-income segments, ranging from PHP3.2 million to PHP12 million, accounted for 70% of the units sold during this period. The top locations for these units were Pasig City, Bay Area, and the Alabang-Las Piñas and CAMANAVA areas.

The completion of new projects is also expected to pick up around the third quarter of 2023, bringing the total condominium stock in Metro Manila to over 156,000 units by the end of the year.

Insights on Vacancy Rate and Rent Prices

The residential vacancy rate in the second quarter of 2023 slightly declined to 17.2% from 17.4% in the previous quarter. This improvement in vacancy rates is observed across all sublocations, including the Bay Area, which had a vacancy rate as high as 26% in 2021.

It’s predicted that the vacancy rate will continue to decline by the fourth quarter of 2023 due to slower condominium completion and the increasing demand for residential leasing, particularly from returning expatriates.

The rental market has also experienced marginal growth in the second quarter of 2023, with a 1% increase in rents, slightly faster than the 0.5% increase in prices.

However, it’s also to be expected that the vacancy rate in the secondary market will become elevated in 2024 due to the substantial completion of new units, especially in the Bay Area, which will account for 27% of completed units by the end of 2024.

Insights on Capital Values/Yields

Home prices in the Philippine real estate market are expected to increase by 3.3% in 2023, supported by improving business and consumer confidence. The demand for pre-selling residential properties is likely to be driven by improving business and consumer sentiments, and other factors like stabilizing interest rates and better mortgage rates.

The positive outlook of consumers in the Philippine real estate market is also clearly reflected in the latest Consumer Expectations Survey by the Bangko Sentral ng Pilipinas (BSP), which indicates a slight increase in the share of households planning to purchase real estate, while the Business Expectations poll shows an improved business outlook.

Most Viewed Locations Per Category

The Philippines, being a tropical country, offers opportunities to invest in beach lots, land for agricultural activities, as well as residential and commercial lots. Investing in tangible assets like lots is a popular choice over other assets due to their low risk and potential for value appreciation over time.

Lamudi’s quarterly report shows that areas in Luzon like Metro Manila, Cavite, and Rizal, remain the hotspot for real estate investments. Lots in these areas get the bulk share of views from potential buyers from the first quarter of 2022 to the first quarter of 2023.

Most Viewed Locations for Beach Lots

The top three most viewed provinces for beach lots in the Philippines are Palawan, Batangas, and Cebu.

Palawan, known for its tourism accolades and international recognition, attracts the most pageviews for beach lots. Investing in a beach lot in Palawan can be a lucrative opportunity, especially for those interested in hospitality and tourism-related service activities.

Batangas and Cebu, on the other hand, are popular for private residential beach lots, with towns like Calatagan, Nasugbu, and San Remigio hosting vacation homes and rentals.

Other resort towns like Panglao in Bohol and the Island Garden City of Samal in Davao del Norte also offer investment potential. Provinces with surf towns like Zambales, La Union, Quezon, and Surigao del Norte have also gained attention from surfers, vacationers, and remote workers seeking a laid-back lifestyle.

Most Viewed Locations for Commercial Lots

According to Lamudi, commercial lots in Metro Manila were the most viewed locations on their website, while Cavite, Cebu, Rizal, Laguna, and Pampanga were the top five provinces for commercial lots outside of Metro Manila.

These popular areas outside Metro Manila are major throughways for the flow of goods and services from Metro Manila to other parts of Luzon. Cebu and Pampanga, in particular, are commercial hubs with technoparks, industrial zones, and retail spaces, attracting labor from neighboring provinces.

These provinces also offer incentives to locators, and the presence of international airports in these areas makes them attractive to overseas investors.

Most Viewed Locations for Agricultural Lots

The top ten most viewed locations for agricultural lots in the Philippines were mostly provinces in Luzon. These agricultural lots are suitable for various farming activities such as crop plantations, livestock farms, tree farms, and aquaculture production.

Cavite and Batangas attracted the most pageviews for agricultural lots. These areas are not only suitable for agriculture but are also gaining popularity for agri-tourism and farm villa rentals. Rizal and Batangas have wellness villages and farm resorts, while Pampanga and Laguna offer Bali-style accommodations with beautiful views of rice paddies. The proximity of these locations to Metro Manila, only one to two hours away, adds to their appeal.

As farm-to-market road networks and other infrastructure projects continue to develop, the value of agricultural lots in these areas is expected to increase. This makes investing in agricultural land in these provinces a promising opportunity for those interested in the farming and agri-tourism sectors.

Collier’s Recommendations for Developers in the Real Estate Industry

Collier’s, a leading global real estate services company, provides valuable recommendations for developers in the real estate industry based on the Q2 Trend Report. These recommendations focus on monitoring interest rates, acquisition of a luxury condominium, and venturing into luxury real estate properties outside Metro Manila due to the demand for such.

On adjusting promotional offers and payment schemes according to interest rate fluctuations

The Bangko Sentral ng Pilipinas has indicated that it’s unlikely to reduce interest rates for the rest of 2023 despite the country’s decelerating inflation rate. As of June 2023, interest rates in the country remain at 6.25%, while average mortgage rates have increased to 8.1% in Q2 2023, compared to 7.3% a year ago and 7.4% in 2020.

Investors are advised to actively monitor interest and mortgage rates, as they strongly influence the viability of condominiums as a residential investment. Developers, on the other hand, should consider these interest rate trends when designing promotional offers and payment schemes to attract interest from investors and end users.

On emphasizing the capital appreciation potential for luxury condo units

The investor market in Metro Manila heavily depends on the capital appreciation potential of condominium units. To attract investors, developers should emphasize the viability of residential properties as a hedge against inflation.

It should also be noted that condominiums located in integrated communities and near public infrastructure projects offer excellent capital appreciation potential, which in turn must be one of the key considerations in acquiring condo units.

On considering the development of horizontal projects outside the capital

Developers should continue to venture into horizontal residential projects outside of Metro Manila, where the demand primarily comes from end-users. This is because there’s a steady demand for house and lot (H&L) and lot-only projects in key areas outside of Metro Manila, including Pampanga, Cavite, Laguna, and Batangas.

In fact, in 2022, approximately 7,200 H&L and lot-only units were sold in Pampanga and Bulacan, representing a 3% year-on-year increase. The average take-up for horizontal projects in the Cavite-Laguna-Batangas corridor reached 18,700 units in 2022, up 2% year-on-year.

Brittany Corporation: The Pioneers in Developing Properties Outside Metro Manila

The Philippine Real Estate Q2 Quarterly Trend Report provides valuable insights into the current state of the market and offers recommendations for developers in the industry. Whether it’s focusing on affordable housing, embracing technology, or prioritizing sustainability, the opportunities in the Philippine real estate market are vast.

At Brittany Corporation and Brittany Homes, we consider ourselves as pioneers in developing residential and commercial real estate properties outside Metro Manila. We’re committed to providing meticulously designed luxury homes in the Philippines that we aim to cater to our potential buyer’s unique lifestyle.

We have long ventured into the nearby areas and capitalized on projects to develop these places, counting on the sustained growth of these areas that are observable in various aspects like population size and number of businesses.

We also foresee the potential of these areas to continue growing in the future, and we believe that it’s a worthy investment to also help in the progress of the macroeconomic conditions of the whole nation.

Don’t miss out on this opportunity to invest in high-quality real estate properties offered by Brittany Corporation, the frontrunner in the Philippine housing market. Make an appointment with us today or visit our LinkedIn profile and YouTube Channel and start your journey towards owning your dream luxury house and lot in the Philippines.

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