Real Estate Investment Opportunities In 2016

Wazzup Pilipinas!

With 2015 drawing to an end, many would-be real estate investors and homebuyers must be wondering what 2016 would bring. Will the condo market finally experience a downturn? Should investors diversify their portfolios and turn to offices? Or should we look outside Metro Manila?

Global property website Lamudi Philippines (www.lamudi.com.ph) takes a look on what are potentially good real estate investment deals in 2016.


1. Strata-titled Offices

Unlike the BPO office towers built and owned by real estate developers and rented to BPO companies, strata-titled offices can be bought by individual investors and buyers and have them rented out to companies. For property buyers looking to diversify their investment portfolios, this property type makes sense as there is currently a shortage of office space in Metro Manila, especially in the major CBDs, placing an upward pressure on rental rates. In addition, Colliers International said in its third quarter 2015 report that decreasing land-bank options in the Makati CBD, Bonifacio Global City (BGC), and Ortigas Center is also pushing capital values of office buildings upward.

Among strata-titled developments currently on the market include Alveo Financial Center along Ayala Avenue, which has 363 units and sells on average Php223,000 per sqm. Others include The Stiles in Circuit Makati (Alveo Land; 283 units; Php198,000/sqm); Century Spire in Century City (Century Properties; 283 units; Php203,000/sqm); Capital House in BGC (Avida Land; 222 units; Php142,000/sqm); One World Place in BGC (Daiichi Properties; 283 units; Php136,000/sqm); and Parkway Corporate Center in Alabang (Filinvest Land; 390 units; Php168,000/sqm).


2. Apartments and Townhouses
Two of the most searched property types by Filipinos are apartments and townhouses, especially in suburban areas like Quezon City, Parañaque, and Las Piñas. These properties are very much in demand among renters, especially starting families as they provide much larger spaces than condos yet they are more affordable than standalone houses. Three-bedroom door apartments in Parañaque average Php3.5 to Php4 million, or monthly rents of Php18,000 to Php25,000.


3. Townships Outside Metro Manila

With land values in Metro Manila prohibitively costly and land values on continuous upward trend, property developers are looking further afield for their next big-ticket projects. Among these projects include Century Properties’ Azure North in San Fernando, Pampanga, where the company to plans to duplicate its success with the Azure project in Parañaque; and Ayala Land’s Alviera in Porac, Pampanga, and Vermosa in Laguna and Cavite.

These developers are banking on their previous success to push these projects forward and all look to perform well in 2016. Ayala Land, for example, will be spending Php70 billion over the next decade on its Vermosa project, which when completed will include office, retail, hotel, residential, and educational segment. In late 2014, Ayala Land Premier started marketing residential lots in The Courtyards section of Vermosa, and has since sold Php4 billion worth of inventory.


4. Residential Lots

Unlike condos, where a huge number of units can be built within a relatively small plot of land, there is only a finite amount of land developers can convert into subdivisions. This is the reason residential lots in these projects are highly sought after and their values appreciate quickly. And example is Alabang West by Megaworld subsidiary Global-Estate Resorts Inc. According to the company, property values in the 62-hectare township surged 19 percent in the 11 months since it launch, from Php47,000 to Php56,000 per sqm. The company also announced that 80 percent of Alabang West’s 788 residential lots have already been sold.


5. Upscale Condos in the Major CBDs

Metro Manila’s condo boom is far from over, but developers are holding back on heir new launches due to massive supply especially in the mid-market segment. This does not mean, however, that no opportunities are available in the condo market. On the contrary, high-end condos, especially larger ones, are expected to perform well both in capital appreciation and rental rates.

According to Colliers, condo vacancy rate is lowest for luxury condos in Makati, expected at 5 percent to the third quarter of 2016. This is due in part to Metro Manila’s leasing market, driven primarily by expats and the BPO sector. On the other hand, JLL reported that rents for Metro Manila luxury condos continue to grow, albeit modestly, on the back of strong demand from expatriate employees of multinational corporations.