Locations outside Metro Manila are likely to experience a strong recovery from the pandemic, according to the latest Lamudi trend report. Aside from provincial cities near the capital, the regional centers Cebu and Davao will be seeing great demand, especially among the mid-income market segment.
Citing insights from top consultancy firm Colliers International Philippines, the report showed that condominium developments priced between P3.2 million to 6 million have been commanding strong popularity lately. Although the demand has dampened in 2020, the experts foresee renewed take-up next year and 2021, as developers accommodate the demands of the new normal.
Meanwhile, in Davao, real estate appetite has been strong in the last four years, only to experience a few hiccups amid the health crisis. Nonetheless, Colliers believes that recovery will happen next year on the back of economic growth.
Better Buying Power
In the data laid out by Colliers, two factors will likely compel the mid-income segment to start diving into the property market again. In Colliers’ Davao Residential 2020, low mortgage rate is identified as a factor lending better buying power to property seekers.
It can be noted that under Pag-IBIG’s Regular Housing Loan Program, home buyers can secure lower interest rates: 4.985 percent per annum under a one-year repricing period and 5.375 percent per annum under a three-year repricing period.
In addition, the Bangko Sentral ng Pilipinas has eased the cap on property loans, raising the limit from 20 to 25 percent.
Flexible terms can spruce up real estate appetite in the new normal era, as mentioned in Colliers’ Cebu Residential Q1 2020 report. Some property developers have already stretched out downpayment schemes, while others have offered special discounts available for a limited period.
Amid the economic crisis, the mid-income market segment can proceed with big purchases, such as those concerning property, given these instruments of financial accessibility.
The Resurgence of the OFW Market
Overseas Filipino workers (OFWs) represent a significant portion of the mid-income segment in the Cebu and Davao real estate market. According to Colliers, they primarily prompt the demand for house and lot developments, as they generally want outdoor lot space.
In the same way, OFWs fuel the popularity of horizontal projects in the Davao residential market. Experts believe that this segment, especially those from the fringes of the city, will remain interested in houses and lots. The demand will grow more aggressively next year as the flow of remittances become more stable.
Colliers urges property developers to look for alternative sites for lot only and house-and-lot projects to seize this vast market. The Davao region ranks fifth among locations that have the largest OFW deployments.
Preference for Integrated Communities
In the cited reports, Cebu Residential Q1 2020 and Davao Residential 2020, Colliers highlighted the value of townships in seeing a vibrant market demand again.
Given the lockdown measures experienced in the past months, buyers are looking for integrated features, which will allow them to conveniently access essential goods and services. Whether it be house and lot or condo development, property seekers lean towards mixed-use communities.
In the Lamudi roundtable discussion held last September titled On the Horizon: Real Estate Leaders on Market Recovery, industry leaders noted the same preference among buyers. Aside from the convenience, townships offer recreational and wellness opportunities for residents, which are necessary in the era of restricted movements.
Response to New Normal Demands
In Cebu, 39 percent of vertical projects set to be developed in the next two years will emerge in integrated neighborhoods, according to Colliers. In Davao, they will make up 35 percent of the upcoming supply. At present, they account for 16 percent of the city’s existing stock of condo communities.
To further accommodate buyers’ new normal preferences, Colliers urge real estate developers to scout for facilities that can be converted into integrated communities. They mentioned Davao’s Chinatown as a promising location.
Old buildings can be remodeled to modern mid or high-rise residential towers, equipped with office and retail spaces. The historical background of the area can prove enticing to some buyers.
In relation to location convenience, nearby infrastructure projects matter to buyers as well. The consultancy firm urges property developers to emphasize the price appreciation potential on residential developments close to Davao Coastal Road, Davao Monorail, Mindanao Railway Project, and Davao Bus Rapid Transit.