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Philippine property prices rising again!

House prices in the country are rising again, as buyers become optimistic about the Philippine economy.

The average price of luxury 3-bedroom condominiums in Makati CBD rose 7% q-o-q to PHP 103,000 per (USD 2, 389) sq. m. in Q1 2011, according to Colliers International. Over the next 12 months, the average capital value is likely to increase by about 5% to P112, 700 (USD 2, 614) per sq m., says Colliers.

True, on an annual basis the figures are less positive. The average house price rose 3.84% during the year to Q1 2011. However when adjusted for inflation, average house price actually dropped 0.21% over the same period.

In Ortigas, the average land value rose by 1.05% q-o-q to PHP124, 000 (USD 2,852) per sq. m. in Q1 2011, and is expected to increase 3%-5% by end-2011.

In Bonifacio Global City Taguig, like the Makati CBD, the average land capital value now stands at PHP103, 000 (USD 2,389) per sq. m., and is expected to increase between 3% and 4% after a year.

Real estate prices are expected to rise by 3% to 5% in 2011, according to Colliers International. Makati CBD is expected to lead the way with a 5.4% y-o-y increase, while prices in other key areas of Metro Manila are expected to rise by 3%.

The total housing stock in the country is also expected to rise further this year. In key areas in Metro Manila alone, an estimated 8,900 units, or over 17 condominiums, are being built. Recent projects include One Rockwell West (504 units), The Columns Legaspi Tower 1 (390 units), Grand Emerald Tower (1,064 units), and The Fort Residences (217 units).

The total number of residential condominium units in Greater Manila’s CBD is expected to reach about 61,000 units within the next two years, twice the 2010 figure (a ‘condominium’ in Philippine parlance denotes something more upmarket than an ‘apartment’)

Rockwell Center still has the highest rentals. A condominium unit typically costs PHP736 (USD 16.9) per sq. m. per month in Q4 2010, up 3% from the previous quarter.
In Makati CBD, rents for luxury 3-bedroom condominiums are expected to increase 4% over the year. During Q1 2011, a 290-sq. m. unit rents for about PHP560 (USD 12.9) per sq. m. per month.

The Philippine housing market relies heavily on remittances from overseas Filipinos, especially mid-scale subdivisions and other housing projects in provinces adjoining Metro Manila. Condominium demand in Metro Manila is also fuelled by employees in the rapidly-expanding business-process outsourcing (BPO) industry (primarily call centres).

The growth of the housing market is held back by several obstacles. The mortgage market is relatively underdeveloped, and most houses are sold for cash or pre-sold. Property buyers also face high transaction costs, corruption and red tape, fake land titles and substandard building practices.

The implementation of the much-anticipated Real Estate Investment Trust (REIT) law, expected to increase market liquidity, is being hindered by regulatory, tax and other issues, although the implementing rules and regulations became law more than a year ago, in December 2009.

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Comments

#1 PHILIP GOULD | March 14, 2012

Ads of today, March 15, 2012, there are 100's of high rise condominium projects under construction in or near Makati. The average price per square meter in Makati for pre-selling condos is 120,000 - 150,000 per square meter with the high end at 175,000 pesos per square meter - 200,000 pesos per square meter for properties like the Trump Tower. However, already constructed, newly finished and ready for occupancy are also 100's of high rise condominium projects. Most buildings are vacant to the tune of 20 - 80%. That is because, once a project is finished and turned over, the owner, will more likely than not, have to do some remodeling and improvements, costing, 5,000 pesos per square meter up to 70,000 pesos per square meter depending on how elegant he wants to get. This also will take time, 1 - 4 months or more. Plus... due to the severe competition of 1000's of comparable units on the market, the owner will have to be creative, innovative, and market conscious, or else his newly purchased condo will sit idle for a year or 2 or 3. That appears to be reality. Now if you add the new buildings coming on board, by the end of this year and each year more and more.... I belive this will continue for at least 5 - 7 years. How fast can these investors - from everywhere else but the Philippines - find tenants, who will likely be bothe foreigners and philipinos? The rental market currently is 500 - 1000 pesos per square meter per month average, depending on amenities and location, including or excluding condo dues, and parking spaces. I have a great little unit ( 25 sq meters) in Bel Air Makati which is fully furnished and rents for 15,000 pesos per month including the condo dues. So that is reality. Great location and tip top condition. Standard is 2 months advance rent, and 2 months security paid all in cash... and Post-Dated Checks for 11 months... I have lots more information available if you need it, at philthemanlove@yahoo.com. Sincerely,
Philip Jay Gould,

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