If you plan to buy a condo for sale in Makati, Philippines, this year, you might notice higher prices, particularly for luxury units. A report showed that a residence along Ayala Avenue might even cost more P400,000 per square meter.
Colliers International Philippines released a report that detailed the price change, which would be among the main trends for this year. Despite the steep price, the luxury condominium market in Metro Manila will continue to perform well due to some factors. For instance, existing projects in Makati City such as those in Rockwell Center are in demand among retail and institutional investors.
Luxury Condominium Market
Based on the Colliers report, investor demand will serve as a critical reason for the continued strength of the luxury condominium market in Metro Manila. Prices are relatively cheaper than other markets in the Asia-Pacific region, particularly in Hong Kong where residential real estate is arguably the most expensive worldwide.
Metro Manila also offers a decent yield when investors decide to use the property as a rental investment. This attracts foreigners to acquire the leasehold property of a building, which is a legal alternative to a freehold purchase. Current laws in the Philippines prohibit foreigners from buying land in the country.
Another reason for the strong demand involves offshore gaming companies that have set up their business in Metro Manila. These businesses, which are mostly from China, have employees who look for rental units near their place of work. Aside from Makati, the Bay Area is a fast-growing destination for residential properties in Metro Manila.
The Bay Area’s Rapid Rise
Colliers noted in its report that the Bay Area would be a key luxury property market for this year in terms of price and supply. As of the third quarter of 2018, the district had the third-largest stock of condominiums. Over 6,000 new units are expected to be launched this year and by 2021, it could even surpass Makati’s central business district as the market with the most number of units.
This might have more chances of happening if offshore gaming companies occupy more office space. The office vacancy rate for 2019 would remain around 5% with the estimated absorption of approximately 910,000 square meters of space, out of almost 1 million square meters slated for delivery this year, according to the report.
As more office spaces sprout in the metro, you should expect prices for homes and rental properties to increase soon. In fact, Property24 data showed that the cost of a new house increased by 33% between January and September 2018.
In the end, Metro Manila remains an attractive destination for real estate investments among Filipinos, foreigners, and offshore companies. The increase in prices will not deter them to dabble in luxury real estate, especially with the prospect of good yields. With that in mind, if you are still thinking about a good place to start, you should consider certain developments in Makati City where prices are competitive due to the presence of several developments.