Developers asked to spread risk across locations, segments 

Philippine real estate developers should spread out their investments across different types of properties and locations to reduce risks, especially as some areas are experiencing high vacancy rates and falling rents. This advice comes from a BusinessWorld report, citing industry experts.

Jettson P. Yu, founder and CEO of PRIME Philippines, emphasized the danger of having all assets concentrated in one city or area. If that specific location faces a downturn, all those assets would lose value. An International Monetary Fund (IMF) spokesperson also noted "persistently high vacancies and falling rents" in parts of the commercial real estate sector.

The Philippine capital, in particular, is facing an oversupply of condominiums, with 82,800 unsold units as of the end of June, according to Leechiu Property Consultants.

Yu suggests diversifying across various real estate segments to ensure stronger demand, recognizing that real estate is cyclical and different segments perform differently at various times.

Joey Roi H. Bondoc, director and head of research at Colliers Philippines, recommends developers look beyond Metro Manila due to a "shift to suburbia." He believes that while the capital may be slowing down, other growth areas offer significant opportunities.

He specifically highlighted Region III (Central Luzon), Region IV-A (Calabarzon), Region VI (Western Visayas), Region VII (Central Visayas), Region X (Northern Mindanao), and Region XI (Davao Region) as key expansion areas. These regions, along with Metro Manila, account for over 90% of the country's total residential units, indicating where future growth is likely to come from.

Bondoc also advises developers to capitalize on the growing demand for lot-only projects. He noted that while price growth for condominiums has slowed, the lot-only segment continues to show strong capital and price appreciation.

Investors are particularly drawn to lot-only developments that offer green spaces and access to amenities like golf courses. Bondoc contrasted the high per-square-meter cost of luxury condos in Metro Manila (P400,000 to P500,000) with the much lower cost of lot-only units in areas like Bulacan, Batangas, or Pampanga (P20,000 to P30,000 per square meter).

Colliers data shows high take-up rates for lot-only units outside Metro Manila, averaging between 52% and 97%. Provinces such as Batangas, Cavite, Laguna, Pampanga, Cebu, Davao, and Bulacan reported take-up rates above 90%.

Bondoc's key advice for developers banking on price appreciation is to explore lot-only projects launched by major national developers outside Metro Manila.