Metro Manila property market shows resilience in 2023

Property values across Metro Manila's commercial districts held steady throughout 2023, defying headwinds both locally and globally, according to a report by Leechiu Property Consultants Inc. (LPC). The report highlights the market's resilience and points toward continued growth with a shift toward inclusivity in 2024.

Landmark Deals and Price Points:

• Prime commercial land in Makati fetched over P1.5 million per square meter (sq. m.), while another prominent deal in Legazpi Village saw a transaction exceeding P1 million per sq. m.
• The Bay Area witnessed a commercial lot changing hands at P400,000 per sq. m.

Filinvest City Leads, Cautious Optimism Prevails:

• Filinvest City cemented its position as the premier central business district in the south, with a 15% year-on-year increase in transaction values.
• While landmark deals dominated the market, transaction volumes remained thin due to investor caution following a 100-basis-point hike in BSP key policy rates to 6.5%. Anticipated rate cuts in 2024 could boost transaction volumes.

REITs on the Rise:

• Property real estate investment trusts (REITs) expanded their portfolio coverage to 2.43 million sq. m. since 2021, defying valuation compression caused by high interest rates.
• Investors view REITs as attractive alternatives with significantly higher yields than traditional real estate assets.

Golf and Country Clubs Tee Off:

• Share prices in golf and country clubs outside Metro Manila surged in 2023, with Valley Golf and Country Club in Rizal leading the pack with a 173% increase. Manila Golf within Metro Manila also saw a substantial 82% growth, fueled by improved road infrastructure.

Condominium Market Rebounds:

• 2023 marked the recovery of the condominium segment in Metro Manila, with a record 40,555 units sold. The sector regained its pre-pandemic peak performance despite facing challenges during the pandemic.
• Buyer-friendly payment terms initially boosted demand but led to increased backouts. Developers adjusted their sales strategies in 2023 to balance volume growth with buyer retention.

Pre-Sales and Launches See Upward Trend:

• The market exhibited significant growth, with pre-sales increasing by 14% and new project launches surging by 66% compared to 2022.
• The first quarter saw an 8.3% rise in pre-sales, likely due to favorable payment terms. Stricter buyer screening and revised terms stabilized pre-sales in subsequent quarters.
• Despite a 30% quarter-on-quarter decline in fourth-quarter launches due to managing inventory, pre-sales remained strong with 9,720 units sold.

Demand Drivers Stay Strong:

• Stable factors like overseas Filipino workers' (OFW) remittances, projected to reach $36.1 billion (a 2.5% increase from 2022), continue to support demand.
• The IT-BPM sector's sustained growth, generating 130,000 new jobs and reaching 1.7 million full-time employees by year-end, further fuels demand.

Growth Beyond Metro Manila:

• Aside from Metro Manila, residential units outside the capital region are gaining traction. Emerging townships offering less congestion and more spacious options at lower costs are attracting buyers.

2024 Outlook: Inclusive Growth on the Horizon:

• The market outlook for 2024 signals a shift toward a more inclusive growth pattern.
• While residential projects within Metro Manila will continue to attract buyers, projects in the southern fringes and outside the capital region are expected to see active demand.

Key Takeaways:

• Metro Manila's property market showed resilience in 2023 despite challenges.
• Landmark deals and REIT growth highlighted market strength.
• The condominium market recovered, with developers adapting to changing dynamics.
• Demand drivers like OFW remittances and IT-BPM growth remain positive.
• 2024 is expected to see more inclusive growth, with projects outside Metro Manila gaining traction.