Metro Manila residential property has been one of Southeast Asia real estate’s largest success stories during the past few years. In 2019, Knight Frank named the capital as Asia-Pacific’s top luxury residential property market with selling prices increasing by nearly 25 percent between 2017 and 2019.
However, the seller’s market in Metro Manila could be closing. The government announced that enhanced community quarantine (ECQ) would be extended into mid-May as the Philippines continues to battle the COVID-19 pandemic. That has caused some experts to adjust predictions that were originally much more optimistic regarding the country’s property market.
“It’s a bit harsh to say that the party has totally ended because the demand is there. There is a pause, I think. What’s happening now is we have been in a landlord’s market for an overextended period already. We’re at this pivotal point wherein it will become a tenant’s market,” Colliers International Managing Director Richard Raymundo told the Philippines Inquirer.
The consultancy expects supply in the residential sector to drop by almost 20 percent this year with the vacancy rate in Metro Manila possibly surpassing 15 percent. For comparison, both the supply and vacancy rates were 11 percent in 2019.
Demand for Metro Manila residential property is being softened by two ECQ-related events. Firstly, local unemployment is rising which will impact the mid-market sector. Secondly, continued travel restrictions are taking its toll on demand from both OFW and foreign investors.
Metro Manila residential property
Experts remain divided on when the Metro Manila residential property recovery will begin, but there is a sector that is already emerging as a buyer’s market. According to Lobien Realty Group, prices for homes on the secondary market will fall. The consultancy added that newly launched and recently completed project prices are expected to remain at pre-ECQ levels.
With some property owners wanting to dispose their assets for liquidity, prices on the secondary market could prove to be extremely attractive when compared to pre-selling units, Lobien Realty Group noted. It may also see properties in some highly-desirable developments hit the open market.
According to Colliers International, rental rates and residential values will both start to recover in 2021 although this growth will be at a more modest pace than in previous years. Those considering buying Metro Manila residential property on the secondary market may not see the immediate returns found as recently as last year, but should be positioned well when the Philippines recovers in full.