Makati, NCR 1200| 32 - 109 Sq Ft
Vibrant Economy Accelerates Local Real Estate Market
The Philippines property market remains vibrant thanks to strong domestic consumption and increases in government spending.
Data from to Colliers International (see graph) indicate that during the year to end-Q2 2013, the average price of a luxury 3-bedroom condominium in Makati Central Business District (CBD) soared by 12.92% equivalent to PHP128,730 per square meter (sq. m.), higher than the annual rises of 5.6% in Q1 2013, 8% in Q4 and 8.3% in Q3 2012.
The highest increase since Q4 1995 was recorded during the latest quarter with the high-end residential property prices in Makati CBD increasing 6.92% in Q2 2013.
In the second quarter of 2013, land values and rents in Makati CBD, also been appreciating recently. Based on figures from the Bangko Sentral ng Pilipinas (BSP), the total real estate loans country-wide soared by 42% to PHP546.51 billion (US$12.47 billion) in 2012 from the previous year, yet the size of the mortgage market remains small at about 5.5% of GDP in 2012. Among the obstacles encountered by property buyers include houses sold for cash or pre-sold, high transaction costs, corruption and red tape, fake land titles and substandard building practices.
In recent years, employees of new IT-related firms such as call centers and other business process outsourcing (BPO) firms have boosted demand for rental housing, with a ripple effect on the construction, retail, and telecommunications sectors, resulting in property price increases of 59.3% (16.2% in real terms) from 2005 to 2008 (see graph). Thus in 2009, luxury condo price growth slowed to a meagre 0.2% y-o-y due to the global financial meltdown. But the significant economic recovery of the Philippines that started in 2010 is now propelling price rises in 2011 (0.72% in real terms).
According to the World Bank, the remittances of Overseas Filipino Workers (OFWs) are powering the low-end to mid-range residential property market including the upper residential market due to increased housing demand from BPO employees and expatriates. Ayala Land has entered this market around 55% of Vista Land’s reservation sales currently going to OFWs in Asia, Europe and Middle East, while US-based OFWs account for another 5% to 10% of sales.