Property market in affected areas to feel Taal eruption’s heat
MANILA, Philippines — For several years, the upland city of Tagaytay has enjoyed a real estate boom, thanks to its cool breeze and tourist spots that give a perfect view of the majestic Taal Volcano.
But the recent eruption of Taal — one of the world’s smallest active volcanoes located in Batangas province — is expected to hurt the property market in badly hit areas and recovery will highly depend on how the government responds to the looming natural disaster.
“In our opinion, overall sentiment is likely to depend on the severity of the eruption and how long it will last, the full impact has yet to be assessed,” Joey Bondoc, senior manager and researcher at Colliers International, said in an interview.
Taal last Sunday spewed ash, rumbled with earthquakes and exploded with volcanic lightning, displacing thousands of residents and disrupting businesses and schools in nearby areas, including the Philippine capital Manila.
Ash from Taal poured over some parts of Luzon, covering vast swathes of land and properties.
Data provided by Colliers International shows 400 residential units — with a total value of P1.2 billion — were sold in Tagaytay in 2019. Sales were even higher in previous years, reaching 1,000 units annually.
Amid the volcanic unrest, some owners in affected areas are likely to let go of their properties. This will attract some opportunistic buyers who are expected to take advantage of the decline in property prices in the near term, Bondoc said.
But Bondoc added that there will be a gradual increase in property prices once the situation stabilizes.
Slower launch of new condominium units is also a possibility once the eruption is over, Bondoc said, with the government likely imposing stricter measures in handing out licenses to sell in the short-term and developers implementing alternative designs, for instance, in roofing.
“Definitely there will be a transition period in terms of recovery of property prices. But the duration of the transition period is likely to depend on the scale of damage and pace of rehabilitation,” Bondoc explained.
“We see some spillover demand for Metro Manila properties especially for residents and investors looking for options outside the Southern Luzon region,” he continued.
Tourism in danger
Batangas province contributed a third or about 2.079 million of the 7.05 million overnight travelers in Calabarzon in 2018, according to data from the Tourism department. More than 595,000 travelers stayed in the town of Talisay, the jump-off point to Taal Volcano’s crater lake.
Collier’s Bondoc said hotel occupancy and retail sales in Tagaytay could take a beating from Taal’s eruption and dampen the attractiveness of condotels that use the volcano and nearby areas as a major attraction.
However, the aftermath of the volcanic activity is unlikely to have any substantial impact on business expansion in the Cavite-Laguna-Batangas corridor, which is expected to remain as a major plank of the country’s economic output.
“Once the situation has stabilized, the Taal area and its vicinity could attract more tourists and this completes the cycle of recovery and appreciation of property prices,” Bondoc said.
A "hazardous explosive eruption is possible within hours to days," the nation's seismological agency warned. Activity of Taal Volcano has "generally waned" in the past 24 hours, state volcanologists said Thursday, but hazardous explosive eruption can still happen.
The country's most powerful explosion in recent years was the 1991 eruption of Mount Pinatubo, about 100 kilometers northwest of Manila, which killed more than 800 people and caused P25 billion worth of damage, excluding the cost of caring for evacuees worth P6.7 billion.
For Collier’s Bondoc, the impact of the Taal eruption on property market in Tagaytay and nearby areas won’t be as severe as the Pinatubo experience.
“If we consider the Pinatubo experience in 1991, it took a major retail development to enter the Pampanga market nearly 10 years after. It took more than 20 years before a large residential developer built a major integrated community,” he said.
“But major developers are already in Tagaytay and surrounding areas, so their expansion now depend on the pace of rehabilitation,” he added. — with reports from BusinessWorld, AFP
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