June 30, 2022

Emerging Condo Trends That Will Manifest in 2022 and Beyond

By: Melecio Martin G. Arranz IV

As the country recovers from the COVID-19 pandemic, the future becomes brighter for the Philippine property market, as it stands to benefit from the anticipated economic rebound beginning this year. Investors such as condo buyers in the Philippines would benefit from knowing the  emerging trends and considerations surrounding the industry. The following condominium statistics in the Philippines will shed some light on emerging condo trends.

An Overview of Philippine Condominium Market Trends

In their quarterly report, real estate investment management firm Colliers Philippines expressed optimism that the improving business and consumer confidence will drive the demand growth of the residential market. Demand for condominium units has grown as the market moves forward to living in the “new normal.” This continuous growth means condominiums remain the primary investment vehicle among investors with high liquidity and increasing popularity among OFWs and end-user homeowners. The report also shared the market overview in the property sector:

• Condominium inventory in Metro Manila is expected to reach around  166,800 units by Q4 2024, an increase of almost 17.3% from 2021 figures. 
• The yearly condominium stock average increase is projected at 6,823 units from 2022 to 2026.   
• The 17.8% vacancy rate from 2021 is expected to drop to 15.9% by Q4 2024, a 2.2 percentage decrease. 
• The secondary market sees a 0.2% decline as rent prices recover, with a projected 1.9% annual rent increase from 2022 to 2024. 
• Property price is on its track to a gradual recovery. The property price increase in Q1 2022 is 1.3%. Projected annual price increase from 2022 to 2024 by 2.2%.

Locations

Research shows that Metro Manila still has the biggest share of the real estate market, given that the capital region is the center of commerce, lifestyle, and governance. As such properties in the metropolis continue to appreciate in value. 
Moreover, the return of foreign and local employees to conventional offices and worsening traffic to pre-COVID levels bodes well for the residential segment in Metro Manila as it signals the recovery in the residential leasing market for the remainder of 2022. Improvement in rental rates benefits investing landlords as rent decline is slowing down to 0.2% in the first quarter of the year means an increase in yield.
Encouraged by the government’s economic rebound goals, remittance inflow from OFWs, and easing lockdowns, the Metro Manila property market will see a significant boost compared to previous years.  Colliers also reported a faster recovery in property prices and expect an increase of 2.7% by the end of the year, as investor sentiment grows. 

Location	2021	2022 Forecast
Makati CBD	249,000/per sqm	253,000/per sqm
Fort Bonifacio	217,000/per sqm	223,000/per sqm

Outside Metro Manila, Colliers sees a growing interest in Bulacan, Pampanga, Batangas, and Iloilo due to the upcoming completion of several Build Build Build infrastructure developments. As such, major developers are land banking in these areas to capture the anticipated opportunities brought out by decentralization in the residential, office, commercial, and leisure segments.
In the Visayas region, Cebu remains a prime destination to secure developable land. According to surveys, the province will have an average forecasted demand of 4,500 units yearly from 2022 to 2026, with developers expected to supply a staggering 4,180 units during this period.
Developers’ bullish interests in Cebu are partly due to office leasing recovery within integrated communities, as well as the lift on borders for condominium projects in areas that cater to those in the leisure property market. Colliers also recommends adding more capacity for MICE (meetings, incentives, conferences, and exhibitions) accommodations in the city.

What Customers Are Expecting from Condominium Developers

Indeed, the pandemic has brought drastic changes to how people conduct their everyday lives. As such, consumers developed new ideals regarding their dream condo home. Fortunately, real estate developers are bent on incorporating attractive features in their projects in the next three years. 
This includes upgrading amenities such as a swimming pool, fitness gym, yoga room, children’s daycare room, business center, library, and green spaces available in their developments to cater to the different needs of residents, whether wellness, recreation, or business. Most developers are also integrating more retail and dining spaces in the commercial section of the developments.

Condominium Development Trends

Return to on-site work will reduce vacancy rates

Over the past two years, the pandemic has brought about challenges, including the office space renting industry. Most companies chose to implement WFH following the official announcement of the outbreak of the pandemic. These restrictions left office spaces temporarily empty or abandoned altogether. 
Fortunately, as strict lockdowns start to wane, companies are slowly encouraging their employees to go back to the office or implement a hybrid work setup. According to a study conducted in Q3 2021, vacancy rates remained steady at 15.6% at the time.
Following the orders to return to on-site work, 2022 vacancy rates have significantly dwindled. Thanks to the increase in vaccination rates and easing lockdown restrictions, business confidence is expected to grow. This renewed sense of optimism will encourage companies to secure new office spaces. 

Completion of infra projects will push developers to new fringe locations

Central business districts in Metro Manila have experienced a scarcity of developable land in the past few years. As the need to develop new projects persists, developers’ interest has expanded to fringe areas such as the northern and southern areas of Manila and the CAMANAVA region.

Specifically, these areas include Alabang–Las Piñas, CAMANAVA, and Manila North, which are mostly focused on affordable and mid-income projects. 
With the growing demand for development projects in these fringe areas, experts encourage real estate developers to continue acquiring developable land in secondary areas in Makati, Bonifacio Global City, CBD, and Ortigas Center.

More amenities to support the hybrid work model

2023 and beyond will bring about many changes, and one of them is developers identifying the public’s interest in condominiums that include amenities tailored to the hybrid work model. This is a great move, considering that 90% of workers exhibit increased productivity in hybrid working models.
Increased consumer demand for home offices encourages developers to design condominium projects with co-working spaces and other business amenities in mind.

Green building technology will become the norm

Experiences brought on by the pandemic have drastically altered the way consumers assess real estate properties. With many options on the market, developers need to get creative with their development strategies. This is where green building technology comes in, which places prime importance on living sustainably. 
Green buildings provide a myriad of benefits. For instance, LEED-certified green buildings decrease maintenance costs by 20% compared to commercial buildings, according to a study. 

Focus on master-planned communities

Master-planned communities are residential developments that provide relevant amenities and experiences of living in a self-sufficient town. The demand for these integrated communities has only grown stronger through the pandemic, as they offer a complete range of essential facilities, dining areas, and leisure destinations within a single, exclusive community. 
With citizens prioritizing safety, convenience, and health, expect this trend to continue beyond the pandemic.

Positive Changes on the Horizon

Change in the real estate industry is expected given the uncertainties brought about by the pandemic, and property developments will continue to evolve to complement the local market context. For Federal Land, the commitment to provide a better living experience remains.  The developer designs and delivers master planned communities that have the right mix of thoughtfully designed living spaces, retail integration, and wellness amenities, as well as the important segments of residential, commercial, and office in every community to provide a better living experience through safe and connected spaces.
Marking its 50th year in the industry, Federal Land reaffirms its commitment to understanding people’s needs by creating properties that leave a positive impact for generations. Federal Land offers innovative and well-built RFO and pre-selling condominiums located in prime spots with high investment potential in the Philippines. 
Reach out today to get started with your homebuying journey.