Vol. XXII, No. 32 [ BusinessWorld Online ]
Tuesday, September 9, 2008 | MANILA, PHILIPPINES
THE LOCAL property market has largely been unaffected by rising food and construction prices in the second quarter, with strong residential condominium sales and office spaces in central business districts (CBD) mostly occupied.
Office rents had barely moved from the previous quarter, but rents should go up by less than a tenth this year compared with almost a third hike a year earlier, property consultant Colliers International said in a report released yesterday.
The study also expects the value of premium grade office spaces in central business districts to go up by 4% to P125,000 per square meter this year.
For residential properties in the Makati business district, Colliers projected a 4% vacancy for residential condominiums, while rent is expected to go up by a tenth by yearend. For the second quarter, the group observed a 7.2% vacancy and a 5.2% rise in rent prices to P566 per square meter.
Property firms earlier said realty demand remained strong even after raising prices by at least a fifth to offset rising construction costs, particularly steel and cement.
Ramon Jose Aguirre, Colliers International research manager, said the effects of the price hikes, which took effect in July and August, on demand would only be reflected in the third quarter.
But demand would likely remain strong since consumers have taken into account the price increases, while local mortgage rates remain low, he pointed out.
Mr. Aguirre said developers might initiate another round of increases in the fourth quarter to again offset rising costs. He said the firm projects price increases for the entire year at 7% to 10%.
Colliers also noted that from January to May, government approvals for licenses to sell property had jumped by almost half to 162,118. License approvals for high-rise residential units experienced the biggest growth at 162% to 18,786, followed by low-cost properties (44% to 28,605 units) and socialized housing (18% to 16,627 units).
The strong demand for mid-income housing was due to better financing schemes and relatively low borrowing costs, the study said. Colliers said retail space stock is expected to go up by 3% this year after ongoing mall developments are completed.
Metro Manila-wide retail space vacancy went down by a percentage point to 12.7% in the second quarter, and this should dip further to 11% by yearend despite slowing retail consumption, it added. Colliers further said lack of land that can be developed and the growth of the business processing industry would lead to a slowdown in land price increases in the Makati and Ortigas business districts.
The group expects land values in the Makati CBDs to rise by only 5% this year from almost a third last year, while Ortigas land value will go up by only 3%. A substantial supply of residential condominiums in other locations like Bonifacio Global City in Taguig will likewise restrain land value appreciation, the study said. — Don Gil K. Carreon
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