10% of Philippine property market considered upscale

A  group of international real estate experts provided tips on buying a new property in a session held at Ascott Bonifacio Global City.

The session, titled "The Growth of Branded Residences in the Philippines," featured speakers including Bill Barnett, Managing Director of C9 Hotelworks; Cyndy Tan Jarabata, President and CEO of Tajara Leisure and Hospitality Group; Saowarin Chanprakaisi and Vanessa Koo, Vice Presidents for Business Development at The Ascott Limited; Gianfranco Bianchi, General Manager for Asia Pacific at The One Atelier; Lee Lin, Asia Pacific Director at Nobu Hospitality; and David Johnson, CEO of Delivering Asia.

The experts said the Philippine property market is currently 10-percent upscale, catering to "people not affected with price points" and "interest rates," while up to 90% is mid-scale, largely serving overseas Filipino workers (OFWs) and their families.

Investing in branded residences, whether upscale or mid-range, could see market values rise by about 25% to 30% from the original price, the experts said. Despite some properties being highly priced, "the demand is there."

Beyond being a good investment, purchasing property is advisable because "we think there is a good forecast for luxury going forward, but a new type of luxury," they claimed. This new luxury increasingly combines the comforts of home with the vacation ambiance of a resort – a trend gaining popularity among developers since the COVID-19 pandemic fueled a desire for paradise-like homes in case of future lockdowns.

Similarly, the trend is shifting from lots sharing common amenities to ready-made villas sold as part of a larger resort.

Here are some pointers from the pundits for aspiring property owners:

Experiential travel 'feels'

Properties that evoke famous tourist destinations or carry renowned brand names from places like the U.S. or Europe tend to sell well due to buyers' "emotional kind of attachment and sentiment to the brand that's something they experienced when they were traveling to these places," speakers said.

Buyers "want to feel that they totally experience a brand… Nowadays, the experiential traveling is making the people want to stay on purpose, travel on purpose," they noted. This extends to any brand that brings nostalgia, whether a car or fashion brand.

With more buyers seeking properties reminiscent of travel, many developers are now focusing on areas outside metropolitan centers, which could also attract foreign buyers. However, accessibility and long-term leasing remain challenges in the Philippines, making it less attractive to foreign buyers compared to Bangkok or Bali, the speakers noted.

Thus, for those eyeing a property for long-term lease, experts advised looking for a resort-like property that is also highly accessible to modern comforts and lifestyles.

Buy from a trusted developer

"Sentimental buyers" exist, but so do "very shrewd investors" who capitalize on luxury brands from trusted developers. The names of these developers alone "yield a premium" for investors, speakers said.

A reputable developer, they explained, is one that has built a name with a wide portfolio of city properties before venturing into resort destinations. The mindset of these buyers is often, "I come visit a beautiful place. I want to own a piece of it, under the brand."

Many such buyers purchase resort properties as a "second home." "They don't need a second home in the city center," the pundits affirmed. "A lot of them are buying resorts or places that they want to go for a holiday." Since these resort properties are not primary residences, buyers appreciate the assurance that "they could lock up and go anytime," knowing "someone is looking after the property, maintenance of the property in the long term."

While resort properties are appealing because they are "internationally managed" like hotels, speakers cautioned that due diligence is crucial. There's a risk a developer might withdraw, leaving the property to a less-known or less reputable brand, which could lead to depreciation. The developer's reputation is especially critical for those planning to live in their property for only a few years before leasing or selling it to move to another country, a growing trend among buyers.

Sense of community, belongingness

A good property fosters a sense of community, the pundits vouched. "They want to find the meaning, they want to be part of the community. So those are the things that the brands could bring," they said, citing Starbucks as an example of a brand that evolved from a cafe chain into a community of coffee lovers.

For those seeking a strong sense of community, speakers recommended properties in mixed-use projects. These not only address unused or idle spaces but also serve a social function, with "brands there as well. It's where people hang out."

Despite the rise of online shopping, "when we go to Dubai, you go to Bangkok, these global playgrounds, so we've never seen so much retail development, so it's still on the up and up," speakers said. Mixed-use projects are seen as "a new park" in many polluted Asian cities, providing "an indoor space where people spend time between their workplace and their homes."

On a budget? Consider co-living

For those with budget constraints or who prefer not to bear the full expenses and responsibilities of homeownership, co-living is an option.

"Korea's a really interesting market. We work there a lot and in Korea, majority of the branded residences are not full ownership… you don't buy a whole unit, you buy a membership in a unit. It's not vacation ownership, but it's a similar model," speakers explained. "So you're selling fractions of units and probably 60% of the Korean branded residents of the market there are these membership models where they're lower pricing point there's more flexibility… They want the lifestyle amenities as well, so it's not about full ownership where they care."

Co-living is increasingly popular, especially among younger generations. "So for the first time buyers, if you're looking at per annum residences, maybe you can look at mid-tier… talking about Gen X and Gen Y… what they're increasingly looking to in projects are co-living. They're looking at singlehood now, which is another word about people who don't want to get married. They're saying we want to be living in a social setting as well… and co-living will move into branded residences as well so that's more of a trend for younger buyers."

Master-planned communities

Beyond accessibility and social conduciveness, a property should be located in a well-planned community, experts said. This ensures efficient access to amenities and facilities, particularly for emergencies like hospitals and schools. For resort destinations, in addition to basic and emergency facilities, the property should be well-connected to other resorts and tourist attractions.

The Philippines has "very good architects" but has yet to master master-planning, speakers noted.