Colliers says housing prices may have recovered in Q4

Residential property prices may have picked up in the fourth quarter after the slump a quarter earlier, Colliers Philippines said.

“Similar to what we have seen previously, the fourth quarter is traditionally a strong quarter for residential take-up whether within or outside Metro Manila, whether it’s condominiums or horizontal,” Joey Roi H. Bondoc, director and head of research at Colliers Philippines, said.

The Bangko Sentral ng Pilipinas (BSP) Residential Property Price Index indicated that housing prices nationwide posted its weakest growth ever in the third quarter at 1.9%.

This was a sharp slowdown from the 7.5% growth posted in the three months to June and the year-earlier 7.6%.

The BSP also reported that lower real estate investment brought banks and trust entities’ real estate exposure down to 19.54% at the end of September from 19.61% at the end of June and 19.55% a year earlier.

Real estate loans climbed 8.9% year on year to P3.096 trillion at the end of September, but real estate investment slipped 5.75% to P354.749 billion.

Mr. Bondoc said yearend bonuses and inflows of remittances from overseas Filipino workers could have spurred demand for residential property in the fourth quarter.

He also noted that the peso’s recent weakness may prompt migrants, especially those from North America, to send more money home.

The peso has been trading between P58 to P59 to the dollar since October, hitting a fresh record low of P59.22 on Dec. 9.

However, Mr. Bondoc said elevated mortgage rates may still continue to dampen housing price growth in the near term, but any potential rate reduction could help property take up and price growth by this quarter next year.

“I think we need to watch out for the… possible reduction in mortgage rates, given that there has been a substantial decline in basic policy rates by the central bank,” he added.

“And if that happens, that will provide a better impetus for a spike in residential demand, and therefore residential prices, starting (in the) first quarter of 2026.”

The BSP ended the year with a fifth straight 25 basis-point (bp) cut on Dec. 11, bringing its total reductions on key borrowing costs to 200 bps since August 2024. The benchmark policy rate is currently at an over three-year low of 4.5%. 

Mr. Bondoc said lowering the mortgage rate between 6% and 6.5% from the current 7.8% could help the property industry by raising confidence among buyers.

“But the concern is that they have not been lowering their mortgage rates,” he added. “If they start doing that next year, 2026, I think (that will be) a very good sign that demand and then prices might recover faster because of this lower mortgage rate.”

Source: Business World

Rezoning and revitalizing Makati CBD

The Makati central business district (CBD) continues to enjoy its stature as the Philippines’ primary financial district. Major outsourcing, multinational, and large Filipino companies gravitate towards the country’s premier financial hub. This has been compelling national developers to expand in the business district despite the obvious lack of developable land in the business hub.

What’s interesting is that there are proposals to amend the zoning ordinance of Makati CBD. Among the Makati Central Estate Association, Inc.’s (MACEA) proposed changes include increasing the allowable floor area ratios (FAR) for office and retail developments. All lots will now be mixed-use. The new zoning ordinance also establishes the “superblocks” system, and a bonus FAR of 1.5 for lot owners that will incorporate breezeways and civic plazas into their developments.

Meanwhile, the Makati local government, major developers, and other stakeholders should also take into account the viability of expanding retail spaces; the city’s sustainability initiatives — given the popularity of healthy and sustainable workspaces; and the efficiency of mass transit systems (especially now that the construction of Makati subway has stalled) and parking spaces across the business district.

TAKING ADVANTAGE OF MAKATI CBD’S DWINDLING AVAILABLE OFFICE SUPPLY

From 2025 to 2029, Colliers projects the delivery of nearly 2 million square meters of new office space in Metro Manila, with Makati CBD accounting for 15% of the new supply. Among the new office towers likely to be completed during the period are Calistoga Office Building, Mckinley Exchange Corporate Center 2, PHC Buendia, The Gentry Corporate Plaza and the redevelopments of BDO, BPI, Metrobank and Chinabank HQs.

Assuming current market conditions continue, Colliers projects that Makati CBD may shift to a landlord’s market as early as next year, due to limited new supply over the next two years. While several major banks are developing new headquarters in the CBD, most of these are expected to be completed by 2029 onwards. The duration of a potential landlord’s market may be protracted unless a substantial portion of space in these HQs is made available for lease to the market.

With office availability dwindling and many existing buildings aging, redevelopment is becoming increasingly imperative to meet evolving demands. Colliers sees the MACEA’s proposed zoning amendments as a key catalyst in driving the redevelopment of the Makati CBD. These proposed changes include increasing the allowable FAR for office developments in Legazpi and Salcedo Villages, as well as permitting mixed-use developments along major thoroughfares. Colliers recommends incentivizing redevelopment projects — particularly those that integrate sustainability — as a critical step in future-proofing the CBD.

NEW CONDOMINIUMS LIKELY TO REPLACE OLD BUILDINGS

From 2025 to 2029, Colliers expects the completion of 20,700 condominium units in Metro Manila, with Makati CBD likely accounting for 12% of the new supply. Majority of these are luxury projects including Arthaland’s Eluria, Alveo Land’s Parkford Suites, and SMDC and Federal Land’s The Estate. Due to the lack of developable land in Makati CBD, property firms have been redeveloping old and existing properties into new residential projects. For instance, Ayala Land Premier redeveloped the Mandarin Oriental Hotel and LeParc Apartments into Park Central Towers and Park Villas respectively. Meanwhile, the Dela Rosa Carpark 2 will be converted into an ultra-luxury project called Laurean.

The proposed Condominium Redevelopment Act, a measure that was seen to complement new office and retail projects in Makati CBD failed to hurdle the last Congress. The bill is likely to be refiled in the next Congress which starts in July. We see Makati CBD benefiting from the measure’s enactment.

Makati CBD’s residential segment remains a cut above the rest. Its share to total unsold ready-for-occupancy (RFO) condominium units is only less than two percent of total unsold RFO across Metro Manila. Secondary and pre-selling condominium projects within Makati CBD are among the more expensive in the metro, especially those along Ayala Avenue and those located in Legaspi and Salcedo villages.

With the proposed rezoning and new projects in the pipeline, Makati CBD is definitely a hub to watch for in the years to come.

Source: Business World

OFW remittances, rate cuts may lift housing demand

Metro Manila's residential market is projected to see tempered launches of mid-income condominiums over the next three years, although anticipated interest rate cuts and steady inflows of remittances from overseas Filipino workers (OFWs) could help support demand for the segment, according to Colliers Philippines.

“Colliers is optimistic that further interest rate cuts and sustained remittances from Filipinos working abroad should partly lift the demand for mid-income projects,” Colliers said in its First Quarter Metro Manila Residential Report.

Pre-selling launches in the first quarter reached around 5,300 units, marking the highest quarterly level since the third quarter of 2023, Colliers said.

Among the notable projects launched during the period were Avida Land’s Avida Towers Makati Southpoint Tower 3 in Makati; 8990 Holdings, Inc.’s Urban Deca Tondo – Bldg. 7 in Tondo; and Shang Robinsons Properties’ Haraya Residences – North Residences in Bridgetowne, Pasig.

Despite the higher volume of launches, net take-up reached only 87 pre-selling units during the period, Colliers said.

Total back-outs, particularly for older developments, rose to 4,700 units in the first quarter, with the lower and upper mid-income segments accounting for 65% of the total.

Colliers said the central bank’s monetary easing, along with continued OFW remittance inflows, is likely to support a recovery in residential demand.

The Bangko Sentral ng Pilipinas (BSP) cut its policy rate by 25 basis points to 5.5% in April.

BSP Governor Eli M. Remolona, Jr. said the Monetary Board is open to two more rate cuts this year, with one possibly as early as June.

Cash remittances rose by 2.7% in the first quarter, based on BSP data.

“Lower interest rates should result in lower mortgage rates, and this should guide developers with their promos and payment schemes,” Colliers said.

In response, developers are advised to offer more flexible and curated payment terms for ready-for-occupancy (RFO) units, including leasing and early move-in promotions, it added.

Colliers also noted that developers must assess optimal product types and price points when expanding in key locations.

Upscale to luxury projects continue to perform well in central business districts such as Fort Bonifacio, the Makati Central Business District, and the Bay Area.

Meanwhile, mid-income projects remain more attractive in fringe locations such as Alabang–Las Piñas, Manila North, Makati Fringe, Mandaluyong, and the Caloocan–Malabon–Navotas–Valenzuela (CAMANAVA) corridor.

The residential vacancy rate in Metro Manila is expected to reach an all-time high of 26% in 2025, driven by the complete exit of Philippine offshore gaming operators (POGOs) and the scheduled completion of new condominium developments.

Colliers expects pre-selling launches to remain subdued in the near term.

From 2025 to 2027, new supply in Metro Manila is projected to average 5,800 units annually, down significantly from the 13,000-unit yearly average recorded from 2017 to 2019, during the peak of POGO-driven demand.

Despite the projected slowdown, Colliers said it is “not all doom and gloom” for the Metro Manila residential market.

“Recovery will focus around launching the ideal residential product at the right location with a viable price and favorable terms,” it said.

Source: Business World