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NEW RECORD HIGH: Condominium pre-sales reach historical high, but slower launches threaten 2019 take-up

Latest sales figures shows 2018 pre-sales covering major CBDs in Metro Manila and the fringes reached 54,000 units, surpassing 53,000 unit record-high in 2017.

Manila, 6 February 2019 - Metro Manila condominium take-up in the pre-selling market remains strong despite higher inflation and the central bank’s decision to raise benchmark yields in 2018. Latest sales figures show that 2018 pre-sales covering major business districts in Metro Manila and the fringes reached 54,000 units, surpassing the previous record-high of 53,000 units in 2017. Colliers recorded a strong take-up for affordable to mid-income units with prices ranging from PHP1.7 million (USD32,075) to PHP5.9 million (USD111,321).



Meanwhile, the country’s inflation has decelerated starting in November 2018, from an annual rate of 5.2% in 2018 the central bank is now forecasting inflation of between 2 to 4% in 2019. With subdued inflation we do not see the central bank raising benchmark yields over the next 12 months and this should sustain demand in the affordable to mid-income residential segments over the next 12 to 36 months.



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.  We also see slower launches having a spill over effect on take-up figures in 2020 and 2021.



Explore residential potential in Quezon City, Ortigas Center and maximize ‘Build, Build, Build’ projects


The groundbreaking for the Manila subway, the most expensive project approved by the government, is planned for Q1 2019, with the first three stations in Quezon City – Mindanao Avenue, Tandang Sora, and North Avenue – due to be completed in 2022.



Colliers sees Quezon City benefiting from the planned infrastructure as seven of the 13 metro stations are in Quezon City, along with improving connectivity given the construction of the Metro Rail Transit-7 (MRT7) and the common LRT-MRT station.



With renewed interest in Quezon City, we see the proliferation of more integrated communities similar to Ayala Land’s and Eton Properties’ existing estates. Among the stations well suited for townships is North Avenue given its interconnection with other mass transportation systems.



We see Quirino and Tandang Sora stations providing residential options supporting offices near the North Avenue station. In our opinion, the development of new residential towers in Ortigas is also feasible as new condominium units are likely to complement the new office space to be developed in the business hub from 2019 to 2021.



Hence, we encourage developers with parcels of land in Quezon City and Ortigas to explore the development of residential projects in these areas.



Aggressive development outside of central business districts (CBDs)


Colliers believes that due to the lack of developable land in major business districts such as Makati CBD and Fort Bonifacio, developers should look to fringe areas as sites for future residential developments. Over the past 12 months, Colliers has observed that 77% of newly-launched units were found in Quezon City, Manila, Caloocan-Malabon-Navotas (CAMANAVA), Ortigas fringes, Makati fringes, and Pasay-Paranaque areas while the remaining 23% were in major CBD’s.



In our opinion, residential projects in these areas continue to serve the end-user demand of mid-income households that are upgrading to condominium living. Other projects in northern Quezon City should attract households from as far as Bulacan, especially with the scheduled completion of the Metro Rail Transit (MRT) 7 in 2021. Those projects in Southern Metro Manila should entice families from Southern Luzon provinces of Cavite and Laguna.