Property market shows signs of recovery in Q1

The Philippine property market has started to show signs of firm recovery, with land values posting an uptick since these started to fall in the first quarter of 1998.

In an analysis of the local property sector, research firm Colliers International revealed that for the first quarter of 2004, licenses approved by the Housing and Land Use Regulatory Board (HLURB) increased to 88,877 units or by nearly 34 percent compared with the same period last year. All property sectors, except for high-rise residential and commercial condominiums, showed year-on-year expansions, it said.

The improvement in land values, the first since they fell in the aftermath of the Asian financial crisis, is shown by the easing vacancy rates in the office sector and encoura-ging absorption of residential condominiums, the study noted.

Land values in the Makati central business district (CBD) posted a two percent increase to an average of P174,675 per square meter (sqm) while those in the Ortigas CBD are up by the same rate to an average of P79,050 per sqm.

Colliers said that in the next 12 months, expectations are for land values to further post an 11 percent year-on-year increase. Prime sites in the Makati CBD are estimated at an average of P194,026 per sqm while Ortigas development lots could escalate to P87,808 per sqm by the first quarter of 2005.

In terms of licenses approved by the HLURB, an average of 29,626 units were approved on a monthly basis so far this year, higher than the 24,795 units per month for the whole of 2003.

The study pointed out that the mass housing segment has been boosted by the elections. The socialized housing segment had 8,548 units approved in the first quarter from 1,857 units in the same period last year, or a 360-percent increase. The low-cost housing segment was up by nearly 200 percent to 17,057 units while mid-income housing increased six percent to 9,982 units from January to March this year.

On the other hand, the high-rise residential segment appears to be cooling down after the flurry of projects in the last three years. Colliers noted that license approval was down by nearly 80 percent to 1,045 units with Fairway Towers of RFM’s Phil Township as the only notable registration.

Registered commercial condominiums likewise fell 54 percent due to the ample supply of office space that mitigated new projects.

Meanwhile, developers continued to launch residential farmlots to serve a niche demand with 500 units registered in the first three months of the year, around 317 percent up from last year. Memorial park development was likewise immune from the downturn of the property cycle with an expansion of 17 percent while industrial and commercial subdivisions grew 288 percent and 116 percent, respectively.

In the same study, Colliers also expressed concern that Metro Manila may already be saturated with retail space after the stock of leasable space remained static in the last three months at 3.47 million sqm.

This year, four new projects are expected to be completed with an aggregate area of 266,775 sqm. These are the SM Makati expansion, Market! Market!, Araneta Center Gateway Mall, and Robinsons Metro Gateway Mall. The SM Makati expansion is expected to be completed middle of this year while the remaining projects are slated for completion by the fourth quarter.

The proliferation of new supply in the first three months of 2004 has led the Manila-wide vacancy rate to slightly soften to 14.3 percent from 14.4 percent at the end of 2003. According to the study, the significant amount of retail space in the next 12 months is expected to push vacancies to around 15 percent by end-2004. Because of the saturation in Metro Manila, major mall developers like SM Prime and Robinsons Land are now expanding in key provincial cities. SM Prime is slated to complete three provincial malls (Dasmarinas and Molino in Cavite and Batangas) in the next two years with an aggregate leasable space of 157,500 sqm while Robinsons will complete 36,300 sqm of leasable space in Angeles, Pampanga and Bacolod in Negros Occidental within the year.