PRICES of high-end residential property units in the country’s capital may go down this year with demand expected to soften due to the economic slump, industry analysts said.
Prince Christian R. Cruz, senior economist at Global Property Guide, said prices of luxury units in Manila could be affected, with fewer people expected to make purchases even as supply rises due to project completions.
"Demand from foreigners and expatriates, who are among the main markets for these products, may go down since they may be called back to their countries with the ongoing job cutbacks," Mr. Cruz said in a telephone interview.
Colliers International research manager Ramon Jose E. Aguirre agreed there was pressure to adjust luxury unit prices downward.
"So far, prices are still flat. Developers are still holding on to current high prices. But when demand dries up during the latter part of the year because of the slowing economy, they would have to lower," he said in another interview.
But Claro G. Cordero, Jr., head of research and consultancy at Jones Lang LaSalle Leechiu Philippines, said prices would likely remain stable since developers had anticipated weaker demand.
"As early as the third quarter, developers realized that they could not count on buyers from overseas so what they did was concentrate on the local market," he said.
"[Local buyers] can carry the market [for the meantime]."
Messrs. Cordero and Aguirre also pointed out that high-end properties could benefit from the volatility of other investment products.
"People with the money to spare are not investing in financial instruments right now because those are too volatile. They are going back to basics such as property," Mr. Aguirre said.
Eton Properties Philippines, Inc. President and Chief Operating Officer Danilo E. Ignacio said the firm was not planning to lower prices.
"We even had a price increase in some of our luxury projects, where demand continues to be strong," he said in a text message.
Global Property Guide, in a survey released last week, ranked prices of high-end residential properties in Manila — estimated at $1,914 per square meter (sq.m.) — as the 87th most expensive out of 112 capitals monitored. Manila was ranked 36th last year, but that survey only involved 46 capitals.
The group ranked Manila’s high-end apartments fourth best in terms of yield, with properties offering a 10.9% return.
"Luxury units here were really marketed for ownership. With the dearth of supply of units for rent and no, yields will remain high," Mr. Cruz said.
The group based its report on the 2008 average price of a 120 sq.m. high-end used apartment located in a country’s economic center where foreigners are most likely to buy. Global Property Guide used exchange rates as of January 27, 2009.
Monte Carlo ($47,578 per sq.m.), which was not included last year, replaced London ($20,756 per sq.m.) as the city where property is most expensive.
Among the six Southeast Asian capitals included, Manila was third most expensive, with Singapore the priciest ($9,701 per sq.m.) and Jakarta the cheapest ($1,102 per sq.m.).
Mr. Cruz noted that while local prices remained cheap relative to the region, constitutional restrictions on foreign ownership made neighboring countries more attractive.
Mr. Cordero said investors may also choose to invest in other Southeast Asian countries because they have advanced real estate investment trusts, which makes the markets there more transparent.
Mr. Aguirre, however, said foreigners may still prefer Manila due to the relative low cost of living and political stability.
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