By Joey Roi Bondoc
OVER the past few years, we have seen major shifts in property developers’ strategies. From primarily focusing on Metro Manila, Colliers has seen substantial launches in growth areas outside the capital region. More master-planned projects mean sizable additions to horizontal and vertical supply across the Philippines, especially in competitive regions such as Central Luzon, Calaba (Cavite, Laguna, and Batangas) corridor, Western Visayas, Central Visayas, Northern Mindanao, and the Davao Region.
Aside from differentiation strategies employed in the construction of residential projects, developers are also acquiring massive parcels of developable land in the above-mentioned regions. These regions accounted for about 47% of the Philippine gross domestic product (GDP) in 2023 and contributed 54% to total overseas Filipino workers (OFW) deployment in 2022. These regions also grew between 5.2% and 7.3% in 2023, while the entire country’s economic output expanded by 5.7% during the year under review.
These are essential strategies for developers that aim to remain relevant in a constantly evolving Philippine property market.
FROM VERTICAL TO HORIZONTAL: THE SHIFT TO SUBURBIAThe Metro Manila pre-selling condominium market continues to see tepid launches and take-up. We attribute this to elevated mortgage rates and lengthened remaining inventory life. Colliers sees a sizable delivery of new condominium units this year, which is likely to raise vacancy in the capital region’s secondary market.
Given a lukewarm pre-selling market in Metro Manila, major developers have taken an aggressive stance in expanding outside the capital region. Property firms are actively landbanking and developing expansive master-planned communities in prime development hubs outside of Metro Manila.
Colliers believes that while property firms are launching integrated projects outside Metro Manila, developers should constantly monitor interest rate changes and assess the most attractive price segment for each Metro Manila sub-location; reassess promos for ready-for-occupancy (RFO) units; and further integrate differentiating features for condominium projects to seize recovering demand.
Developers have been recalibrating their strategies and carefully assessing which developments to focus on. The change in end-users’ and investors’ preferences post-COVID (coronavirus disease) has resulted in property firms aggressively launching massive township projects that highlight the live-work-play-shop lifestyle. Developers are also slowly shifting to horizontal residential projects in key growth areas given the Metro Manila pre-selling condominium market’s stifled demand.
INTEGRATING DIFFERENTIATING FEATURESColliers believes that the importance of open/green spaces, smart home technologies, and proximity to places of work and malls are highly valued more than ever. The pandemic has changed the way people live, work, and shop, resulting in developers integrating new features into their projects to satisfy residents’ evolving preferences.
In our view, residential projects in Metro Manila that provide upscale amenities and top-tier concierge services continue to remain popular among the experienced and affluent clients. We believe that developers should continue innovating with their condominium projects by offering new features and services and by aggressively differentiating. Over the past year, several developers have integrated more healthy and sustainable amenities into their newly launched projects. Some have also incorporated unique features such as glamping nooks, garden gazebos, and sky promenades as hyper-amenitized condominium developments become the norm.
LAUNCH OF HORIZONTAL PROJECTS OUTSIDE METRO MANILAColliers believes that developers will continue to venture into horizontal residential projects outside of Metro Manila where demand comes from end users. Among the developers that will launch massive horizontal projects outside the capital region include Rockwell Land Corp. with its 85-hectare beach property in Lian, Batangas and a 300-hectare horizontal project in San Jose, Bulacan. Century Properties, Inc. also announced that it is launching five new projects under the PHirst brand this year with a combined land area of 85 hectares.
Meanwhile, Cebu Landmasters, Inc. has also announced its plan to expand outside of Visayas and Mindanao (VisMin) and establish its presence in Luzon. The firm disclosed that it is receiving offers from landed families in Camarines Sur, Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon), and Pampanga. This is a strategic move for one of the country’s major developers in the VisMin region. This is definitely a recalibration for Cebu Landmasters, Inc., going out of its stronghold (VisMin area) and exploring investment opportunities in Luzon.
MORE JV DEALS FOR UPSCALE TO LUXURY PROJECTSThe share of upscale to luxury residential projects to total pre-selling take-up in Metro Manila increased to 18% in 2023 from 10% in 2022. We attribute this to the rising share of higher-priced condominium units to total launches in the pre-selling market in 2023. While the supply and demand for mid-income projects have held firm, the share of pre-selling condos priced at least P12 million ($214,300) per unit has steadily increased, particularly after 2020 and 2021, which we consider to be a disruptive period for the Metro Manila condominium market.
In our view, developers planning to launch projects within the upscale to luxury price band should consider joint venture (JV) deals either with local players or foreign developers. We have seen developers implementing this strategy as they attempt to push their pre-selling residential prices higher. These partnerships should be beneficial to property firms with limited landbank as well as to those that intend to offer upscale to luxury and even ultra-luxury residential projects.
As of end-2023, Colliers data showed that JV luxury projects in Metro Manila have take-up rates of between 64% and 100%.
STRATEGIC LANDBANKING FOR FUTURE MASTERPLANNED PROJECTSProperty firms remain aggressive in developing master-planned communities outside Metro Manila. Over the past 12 months, among the expansive townships launched by national players include Ayala Land, Inc.’s Centrala in Pampanga, Alsons Properties, Inc. and DoubleDragon Properties Corp.’s Northtown Center in Davao, Federal Land, Inc. and Nomura Real Estate Development Co., Ltd.’s Riverpark in Cavite, and Megaworld Corp.’s Baytown Palawan in Puerto Princesa (see map for others). Colliers attributed this not only to the lack of developable land in Metro Manila but also to a gamut of other factors, including the improving infrastructure connectivity in key development hubs outside the capital region as well as rising appetite for condominium projects and office towers.
In our view, property firms can command premium pricing for their residential projects developed within master-planned projects while office developers are able to capture demand from emerging outsourcing destinations outside Metro Manila. Colliers believes that the completion of Metro Rail Transit-7 (MRT-7), New Manila International Airport, and North-South Commuter Railway should entice more property firms to landbank near these public projects and develop new master-planned communities.
LAUNCH OF MORE LEISURE-THEMED PROJECTS OUTSIDE METRO MANILADevelopers have been taking advantage of the rising demand for resort or leisure-oriented properties outside Metro Manila. These projects were already popular pre-COVID but the pandemic only highlighted the need for these leisure-themed residential enclaves. Among the developers that have leisure-centric properties outside Metro Manila include DMCI Homes, Inc., Rockwell Land Corp., Megaworld Corp., Ayala Land, Inc., Robinsons Land Corp., Cebu Landmasters, Inc., and Damosa Land, Inc. with projects located in Cebu, Davao, Bohol, Palawan, and Batangas. These projects remain popular, and Colliers encourages developers to further assess launching similar projects.
We also see the popularity of golf communities. In our view, residential projects near golf estates have high price appreciation potential. Golf communities are also becoming popular as they are banking on the travel and tourism sector’s recovery post-COVID.
Joey Roi Bondoc is the director and head of Research of Colliers Philippines.
