THE MUCH-FEARED glut in the property sector is not likely to happen, said property management and consulting firm CB Richard Ellis (CBRE) Philippines, as the industry is event expected to set another banner year in 2012 and continuing growth in the succeeding years.
In a press briefing held Wednesday, Jose Luis Matti III, Executive Director for asset services group at CBRE Philippines, said property developers are now wiser and more cautious in implementing their projects. “The developers are prepared for this because they have installed systems against a scenario on glut. A lot of the developers were burned in 1997. But as long as they keep in mind the fundamentals, they are safe.”
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The property sector was one of the major casualties of the 1997 Asian financial crisis. A lot of condominium projects in Metro Manila were abandoned by developers as capital dried up.
Matti said developers are also adopting a prudent position in marketing their products. He pointed out that the current group of developers will only commit to a groundbreaking when they have initially pre-sold 50 percent of the total units.
In his presentation, Matti said the trend toward vertical or condominium living continues to rise as more buyers are opting to buy units in the metropolis mainly due to accessibility to workplaces. For this year, Matti said around 15,000 units are expected to be launched in the Metro Manila residential market.
This would rise to 25,000 units in 2013 and grow further to 35,000 units in 2014. Around 15,000 and 10,000 units are expected to be finished in 2015 and 2016 respectively.
The reduction in 2015 and 2016 is attributed to the completion of the projects launched in 2012 and 2014.
For his part, CBRE Philippines Vice President for corporate estate services Joey Radovan noted there was even an observed increase in rental charges in the metropolitan area. The highest rental increase was seen in Alabang with a year-on-year change of 12.91 percent (P480.98 per square meter in 2010 to P543.09/sq.m in 2011), followed by Quezon City’s 9.25 percent (P480.98/sq.m in 2010 to P537.21 in 2011), Makati’s 7.76 percent (P779.87/sq.m in 2010 to P840.35), Fort Bonifacio’s 7.15 percent (P650.87/sq.m in 2010 to P697.43/sq.m in 2011), and Ortigas’s 1.39 percent (P541.90/sq.m in 2010 to P549.44/sq.m in 2011).
Radovan said increasing rental rates in 2011 have been largely a result of increasing demand for office space by (business process outsourcing), traditional offices, and the lack of new office supply in 2011.
“Furthermore, vacancy rate remained below 5 percent since the second quarter of 2011. Upcoming supply in Metro Manila which will become leasable in 2012 is 854,660 square meters,” said Radovan.
According to CBRE Philippines, a total of 259,380 residential condominium units have been launched from 2000 to 2011. With the exception of 2005 and 2009 when units launched dropped by 35 percent and 4 percent, total number of units launched on a yearly basis has been steadily increasing. Last year alone showed a 29-percent increase from 2010 with 57,979 units launched—reflecting the strong demand in the residential sector.
In the press briefing, CBRE Philippines Chairman, Founder and Managing Partner Rick Santos said the property sector would continue to grow in 2012.
“The Philippine real-estate market moves counter-cyclical to the European and US markets—driven by outsourcing,” said Santos.
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