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Manila Market Intelligence: December 3, 2020

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AboitizLand reservation sales surge amid lockdown

NEWS

Despite the strict lockdown, Aboitizland Inc. reported higher sales compared to pre-pandemic levels. Reservation sales of the developer averaged about 80% of its original target and is now on track to surpass 2019 sales. President and CEO David Rafael said that the sustained demand for residential properties was due to the shift in buyers’ preference as investors eye house and lot (H&L) projects outside of Metro Manila such as Batangas, Cebu, and Central Luzon. As a response to the health and safety protocols implemented by the government, Aboitizland was among the first developers to offer digital-based homebuying during the lockdown period.

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RESEARCH VIEW

Demand in the residential market remains subdued due the slowdown of take-up from Overseas Filipino Workers (OFWs) and foreign employees. In 9M 2020, take-up in the pre-selling market reached 24,900 units, down 28% from 34,500 units in 9M2019. Given the current market condition, we project prices and rents to decline by 13% and 7.7%, respectively, in 2020. Despite our projected correction, we see a number of recovery enablers that will likely sustain the residential market. This includes the growing interest for projects in urban areas outside of Metro Manila. Data from The Outlook report of Lamudi showed that both pageviews and leads for selected provincial cities grew in H1 2020. During the period, pageviews and leads for properties in Calamba, Laguna increased annually by 16.3% and 37.3%, respectively. We recommend that investors consider house and lot (H&L) projects outside of Metro Manila offering larger living areas and open spaces. Investors should also monitor ready-for-occupancy (RFO) projects that are being offered at a discount. In our view, now is an opportune time to buy given the low mortgage rates.

10-month tourism arrivals, receipts plunge by 80%

NEWS

Data from the Department of Tourism (DOT) show that inbound tourism arrivals  from January to October 2020 plunged 80.6% YOY to 1.32 million. Tourism receipts also dropped 79.7% to PHP81.05 billion (USD1.7 billion) from PHP398.93 billion (USD8.3 billion) in 10M 2019. The DOT attributed the huge decline in arrivals to the ban on inbound international tourist travel. Meanwhile, the DOT has steered its focus on reviving domestic tourism by reopening domestic destinations such as Baguio, Ilocos Norte, Ilocos Sur, Pangasinan, La Union, Boracay and El Nido in Palawan.

 

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RESEARCH VIEW

The decline in foreign arrivals partly led to a drop in occupancy rates of hotels across Metro Manila. Hotels were temporarily barred from accepting guests with operational establishments catering only to returning Overseas Filipino Workers (OFWs) and frontliners during the lockdown. Given the gloomy outlook on tourist arrivals, we project average hotel occupancy to only reach 30% by the end of 2020, from 71% in 2019. We also see average daily rates (ADR) declining by 30% in 2020 due to lower occupancy. Hotels in areas that have been allowed by the Department of Tourism (DOT) to operate should innovate  by offering keyless check-in, robotic butlers, smart room controls, and 24/7 mobile connectivity. Given the slowdown in demand, hotel operators may also consider reconfiguring their spaces into co-living facilities or flexible workspaces. These should be promoted online and on various social media platforms and will likely help with their gradual recovery.

PHirst Park launches P1.9-B Pampanga development

NEWS

PHirst Park Homes, Inc., the joint venture of Century Properties Group (CPG) and Mitsubishi Corp., launched its new affordable housing project in Pampanga. The 10-hectare (100,000 sq m) PHirst Park Homes Magalang located in Barangay Santo Rosario will likely offer 1,079 units with a total value of PHP1.9 billion (USD39.6 million). The first phase of the project includes 556 house and lot (H&L) units with sizes ranging from 40 sq metres (430 sq ft) to 80 sq metres (860 sq ft) and starting at PHP1.5 million (USD31,300) per unit. PHirst Park Homes President Ricky Celis mentioned that aside from CALABARZON (Cavite-Laguna-Batangas-Rizal-Quezon), the group is also eyeing Central Luzon given the sustained demand in the area.

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RESEARCH VIEW

In our view, there has been a rising interest from end-users and investors to consider residential developments outside of Metro Manila. Despite the pandemic and community lockdowns, Colliers has observed a sustained demand for house & lot (H&L) and lot only projects in Cavite, Laguna, Batangas and Pampanga. In Pampanga, the annual average take-up for H&L projects reached 4,108 units from 2017 to 2019, higher than the 3,224 units from 2014 to 2016. To capture the demand, Colliers believes that developers should highlight their projects outside of Metro Manila that offer larger living spaces, more open areas, and higher capital appreciation potential which are important to both end-users and investors. This is also an opportune time for developers to tap digital alternatives such as virtual reality (VR) tours and automated payment systems that should help ease the process of homebuying. The implementation of infrastructure projects such as roads, airports, and railways will also likely further raise the attractiveness of these locations for residential projects. The completion of these public projects should also boost the residential projects’ potential for capital appreciation.

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Related Experts

Joey Bondoc

Associate Director

Research

Manila

Prior to joining Colliers in March 2016, Joey worked as a Research Manager for a research and consutancy firm where he handled business, political, and macroeconomic analysis. He took part in a number of consultancy projects with multilateral agencies and provided research support and policy recommendations to key government officials and top executives of MNCs in the Philippines.

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