Real estate broker Leechiu Property Consultants Inc. said capital values across Metro Manila’s main commercial districts have proven sustainable despite local and global headwinds throughout the year.
Some landmark deals during the year include the P1 million per square meter commercial lot in Legazpi Village, Makati and another commercial lot also in Makati transacting for over P1.5 million per square meter.
In the Bay Area, a commercial lot traded hands for P400,000 per square meter. Meanwhile, Filinvest City in Alabang touted as the main central business district in the southern part of Metro Manila, posted a 15 percent annual increase in transaction values.
“Despite these landmark deals, transaction volumes are still thin as investor outlook remains cautious on the back of the 100 basis point increase in the Bangko Sentral ng Pilipinas’ key policy rates this year from 5.5 percent to 6.5 percent. Should the anticipated interest rate cuts materialize in 2024, we may see improvement in transaction volumes,” Leechiu said.
The real estate investment trust (REIT) industry, meanwhile, has widened its portfolio coverage to 2.43 million square meters since the first REIT listing in 2021.
“The REITs continue to grow their portfolio despite valuation compression due to the high interest rate market. For investors, however, REITs are viewed as an attractive investment alternative with its significantly higher yields than traditional real estate assets,” the broker said.
Share prices in golf and country clubs outside Metro Manila showed high double- to triple-digit growth in 2023, pushed by improved road infrastructure.
Valley Golf and Country Club in Rizal emerged as standout performer outside Metro Manila, growing by 173 percent, while Manila Golf takes the spotlight in Metro Manila with an 82 percent increase.
The residential market also recovered this year, mainly in Metro Manila which saw a record of 40,555 units sold.
The sector reached its peak performance two years before the onset of Covid-19 but faced challenges during the pandemic. The ensuing market decline prompted developers to offer buyer-friendly payment terms to stimulate demand.
“However, these measures also increased the back out risk. In 2023, developers reassessed their sales strategies to balance between increasing sales and mitigating buyer attrition,” Leechiu said.
The market, it said, exhibited significant growth, indicating a trajectory toward a more normalized real estate cycle. Pre-sales grew by 14 percent, and new project launches surged by 66 percent from the previous year.
On the supply side, there was a surge in launches during the first quarter, reflecting the attractive sales levels achieved.
However, as increased back outs became evident, developers gradually restrained launches to manage inventory, resulting in a 30 percent quarter-on-quarter decline in fourth quarter launches. Despite this trend, pre-sales remained strong, with 9,720 units sold.
The broker also reported growing interest in residential units outside Metro Manila. Emerging townships, which are less congested and offer more spacious options, are witnessing increased demand due to lower acquisition costs.
“The market outlook for 2024 signals a shift toward a more inclusive growth. While residential projects within Metro Manila will continue to attract buyers, projects just outside the capital region, particularly in southern fringes, are expected to experience active demand levels,” it said.
“Infrastructure projects spanning the country are fostering enhanced connectivity among provinces, facilitating more widespread development across regions,” the broker said. Townships outside Metro Manila have relatively lower capital values due to their locations.
However, buyers can capitalize on this by taking advantage of opportunities during the pre-selling stage, as property values tend to appreciate upon the completion of infrastructure developments, the broker said.
