The Philippines’ residential property market continues to perform very well, due to robust economic growth. Makati CBD property prices have risen by almost 132% from 2010 to 2018. Yet prices are not high, and yields are good, and the Philippine economy is in the 8th year of strong growth.
The average price of a luxury 3-bedroom condominium unit in Makati central business district (CBD) soared 15.55% (9.91% inflation-adjusted) during 2018 to PHP230,000 (US$4,371) per square metre (sq. m.), from y-o-y rises of 10.46% in 2017, 9.95% in 2016, 13.43% in 2015, 7.11% in 2014, 14.37% in 2013, and 10.06% in 2012, according to Colliers International. During the latest quarter, condominium prices in Makati CBD increased 5.02% (5.55% inflation-adjusted) in Q4 2018.
House prices continue to rise in other major Metro Manila CBDs:
In Rockwell Center, the average price for a 3-bedroom condominium rose by 10.6% (5.2% inflation-adjusted) to PHP244,500 (US$4,650) during 2018In Fort Bonifacio, the average price for a 3-bedroom condominium soared by 17% (11.3% inflation-adjusted) to PHP205,500 (US$3,908) per sq. m over the same period.
However, house price growth is more muted nationwide. During the year to Q3 2018, the nationwide residential real estate price index rose by 4.4% (-2.2% inflation-adjusted), according to the Bangko Sentral ng Pilipinas (BSP), the country’s central bank. Quarter-on-quarter, the index dropped 0.6% (-2.8% inflation-adjusted) in Q3 2018. The residential real estate price index, published every quarter, is based on bank reports on residential real estate loans.
By property type:
Condominium units saw y-o-y price increase of 5.8% (-0.8% inflation-adjusted) in Q3 2018 from a year earlierFor single detached/attached house, prices rose by a meager 0.2% (-6.1% inflation-adjusted) during the year to Q3 2018Duplex house prices surged 30.7% (22.5% inflation-adjusted) y-o-y in Q3 2018Townhouse prices rose by 18.3% (10.9% inflation-adjusted) over the same period
In the National Capital Region (NCR), residential property prices increased 6.8% (0.1% inflation-adjusted) during the year to Q3 2018 while in Areas Outside the NCR (AONCR), prices rose by 2.2% (-4.2% inflation-adjusted), according to the BSP.
Demand remains strong. In 2018, the take-up of pre-sold condominium uits throughout Metro Manila, including fringe locations, reached 54,000 units – surpassing the previous record-high of 52,600 units in 2017, according to Colliers International. This was mainly due to strong demand from starting families and young professionals and the influx of Mainland Chinese in the Philippines. Household formation has increased by an average of 3% every year in the past five years.
Residential property demand is expected to remain robust this year:
“Colliers believes that pre-sales in 2019 will likely remain strong given the strong end-user demand. However, topping the 2018 sales figures might be a challenge given Colliers’ projected slowdown in launches due to the dearth of available developable land in Metro Manila and the continued acceleration of land prices in the country’s key business districts.”“Local and foreign high net worth individuals continue to drive the residential sale market, typically securing the biggest and most expensive units from high-end and luxury brands to maximize the value appreciation in major markets,” said Jones Lang LaSalle in its 2018 report.
In 2018, the Philippine economy expanded by about 6.2%, according to the Philippine Statistics Authority (PSA). It was lower than the average annual growth rate of 6.6% from 2012 to 2017 but still places the country as among the fastest growing economies in Emerging Asia. The economy is expected to grow at a faster pace of 6.7% this year, amidst improving macroeconomic conditions and slowing inflation, according to ADB President Takehiko Nakao.
Land values continue to appreciate
Land prices continue to rise in all major high-end residential areas, according to Leechiu Property Consultants:
In Forbes Park, land prices surged almost 34% y-o-y to an average of PHP375,000 (US$7,123) per sq. m. in 2018.
In Ayala Alabang, land prices increased 15.8% to an average of PHP110,000 (US$2,089) per sq. m. in 2018 from a year earlier.
In Dasmariñas Village, the average land value increased 8.4% to PHP374,000 (US$7,104) per sq. m. in Q1 2018 from the prior year.
In Urdaneta Village, land values rose by 8% to an average of PHP270,000 (US$5,129) per sq. m. in Q1 2018 from a year earlier.
Philippine residential property is still below pre-Asian Crisis values!
Surprisingly, despite so much price appreciation, the Philippine housing market has still not recovered from the crash after the 1997 Asian Financial Crisis. Between 1997 and 2004, luxury condominium prices dropped 28% (52% inflation-adjusted), in the biggest property crash of all countries affected by the Asian Financial Crisis.
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