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Manila Market Intelligence: January 5, 2021

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Key tollways operational this year

NEWS

San Miguel Corp. (SMC) and Metro Pacific Tollways Corp. (MPTC) are on track to opening selected expressway projects in 2021. The PHP37.45 billion (USD780.21 million) 18-kilometre (11.2 mi) Skyway Stage 3 is scheduled to be fully operational by January 14, 2021 and is projected to divert at least 55,000 vehicles from Metro Manila’s major thoroughfares. On the other hand, the PHP10 billion (USD208.33 million) Skyway SLEX Extension and the first section of the PHP23.3 billion (USD485.42 million) NLEx-SLEx Connector Road project are targeted to be operational by the first quarter and before end-2021, respectively. The second portion of the NLEx-SLEx Connector project will likely be completed in 2022. Other projects such as the PHP30 billion (USD625 million) Cebu-Cordova Link Expressway (CCLEx) and the NLEx Candaba viaduct are also scheduled to be completed in 2021.

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RESEARCH VIEW

In our opinion, the implementation of infrastructure projects has the potential to raise property values, create business opportunities, and boost the attractiveness of integrated communities outside the capital region. In 2021, the Department of Budget and Management (DBM) aims to spend PHP1.17 trillion (USD24 billion) on infrastructure, up 42% from the projected PHP825 billion (USD17 billion) in 2020. Colliers believes that the higher infrastructure spending should help stoke demand in the property sector and influence developers’ expansion strategies. From 2021 to 2022, Colliers sees the completion of other infrastructure projects such as the Clark Airport Modernization, BGC-Ortigas Link Bridge, MRT-3 Rehabilitation, MRT-7, MRT-LRT Common Station, LRT-1 Cavite Extension, LRT-2 East Extension, and the Cavite-Laguna Expressway (CALAX). Once completed, we see these benefitting the provinces of Cavite, Laguna, Batangas, Bulacan, Pampanga, and business districts within Metro Manila.

Century Properties pushes expansion, diversification

NEWS

Century Properties Group (CPG) said that they will continue to diversify their portfolio despite the challenges brought about by the pandemic. In H1 2020, CPG reported reservation sales amounting to PHP1.6 billion (USD33 million), equivalent to 651 condominium units and 1,274 house and lot (H&L) units under their affordable housing portfolio, PHirst Park Homes. During the period, CPG also launched two PHirst Park Homes communities in Nasugbu, Batangas and Magalang, Pampanga. PHirst Park Homes reported reservation sales of about PHP3.12 billion (USD65 million) from their projects in Cavite, Laguna, Batangas, and Bulacan in H1 2020.

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RESEARCH VIEW

Despite the pandemic, we have observed steady demand for horizontal residential projects in key areas outside of Metro Manila such as Cavite, Laguna, Batangas, and Pampanga. In H1 2020, take-up of house and lot (H&L) projects in Central and Southern Luzon reached 4,000 and 9,000 units, respectively. In both locations, projects under the economic to affordable segments (PHP580,000 to PHP3.19 million or USD12,100 to USD66,500) accounted for more than 70% of take-up. We project sustained demand for these projects as investors are likely eyeing homes with larger living and outdoor spaces. We believe that the pandemic has highlighted the need to live within an integrated community with immediate access to essential goods and services. Moving forward, developers with upcoming projects located within townships should highlight the integrated components of their developments to attract potential home buyers. They should also pro-actively target Overseas Filipino Workers (OFWs) that primarily drive the end-user demand for horizontal projects.

Vista Land to build more integrated communities

NEWS

Vista Land said it will focus on developing integrated communities. The developer will also focus on integrating lifestyle office space, university town, healthcare, themed residential developments and leisure components. The company  disclosed it continues to benefit from steady inflow of OFW remittances.  Vista Land said 55 to 60 percent of its sales come from the OFW market. The firm has started launching new projects in its existing landbank. It is also benefiting from price increase in house and lot and Lot Only projects in the provinces.

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RESEARCH VIEW

Colliers has observed a sustained demand for residential projects within integrated communities during the pandemic. In our view, the pandemic has only highlighted the need to be in an integrated community where consumers have an immediate access to offices, basic needs, and health facilities. Colliers believes that the demand for projects in integrated communities will likely be sustained even beyond the pandemic. Colliers encourages developers to continue tapping the demand for integrated communities and maximize the availability and recent completion of crucial infrastructure projects such as toll roads within and outside of Metro Manila. Colliers also recommends that developers observe the demand generated by OFWs or households receiving remittances from their relatives abroad.

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Joey Bondoc

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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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Martin Aguila

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