Metro Residential Market Seen Bottoming out This Year -- JLL

THE Metro Manila residential market may bottom out this year, with property developers expected to ramp up new project launches to cater to growing housing demand, a property consultancy group said on Tuesday.

In a briefing, Claro G. Cordero, Jr., head of Jones Lang Lasalle (JLL) Philippines’ research, consulting and valuation advisory services, said developers have remained cautious so far, with unit launches in the first half reaching only 38% of the close to 10,000 units rolled out in 2015.

“We are at the bottom. By next year, we might be seeing improvement in new launches and the issuance of licenses to sell because the supply pressure is not there anymore,” Mr. Cordero said.

“In terms of new product launches, the bottom will likely be at 5,000 units per year in Metro Manila. This year, we may likely hit 5,000 units,” he added.

The supply of new units in the market will drop to around 25,000 next year from a high of roughly 40,000 in 2015 and 2016, easing the pressure and prompting developers to start ramping up project roll outs, Mr. Cordero said.

Oversupply worries in the condominium market triggered by the aggressive expansion of Henry Sy-led SM Development Corp. (SMDC) have prompted developers to delay the launch of some projects since reaching its peak in 2012.

“They are getting aggressive. As they become aggressive, the other developers will follow through,” Mr. Cordero said.

By the end of the year, SMDC is expected to become the country’s biggest developer in terms of completed mid-range to high-end residential units in Metro Manila with 45,090 units, followed by Megaworld Corp. at 37,900 units and DMCI Project Developers, Inc. at 25,300 units.

By 2021, SMDC is seen retaining its dominant position with 69,200 units followed by Megaworld at 54,000. Ayala Land, Inc. will take the third spot with 43,900 units.

The Philippines’ high-growth trajectory and growing population will continue to fuel demand for housing, office and factory space, JLL National Director P. Ryan Isip said.

At end-March, Manila ranked 10th with lowest rental value and fourth with lowest capital value among 27 key Asian cities, JLL Head of Tenant Representation Lizanne H. Tan said.

“There is a lot of space between where we are today and where we can be... If you look at the cost of money as to what you can make, the rental yields [provide] an opportunity. This is one of the best opportunities in the region. If anybody doesn’t have a real estate play here, it’s time to get into it,” Mr. Isip said.