Ortigas Center and Pillars for Long-term Growth
Posted by Ortigas Land
Date posted October 31, 2020
The COVID-19 pandemic has disrupted several sectors of the economy, including property.
Investors and developers, however, should consider that the long-term growth prospects for the Metro Manila condominium market still look good despite the pandemic.
The property sector is, after all, among the major beneficiaries of the government’s Build, Build, Build program. Apart from dictating strategies of condominium developers in the capital region, infrastructure projects, once completed, should help raise land and condominium prices in Metro Manila.
Ortigas Center is one of the most thriving business districts in the metro today
The growing interest to be in an integrated community as well as office leasing prospects should also lift residential demand beyond the pandemic.
Colliers Philippines data showed that since 2012, Metro Manila has seen a steady appetite for vertical projects. The pre-selling condominium market recorded some 44,900 units of annual launches and about 45,900 units of yearly take up from 2012 to 2019.
Despite the strict lockdown imposed in Metro Manila in the second quarter of 2020, Colliers recorded a decent take up in the pre-selling market. During the quarter, take up reached 8,700 units compared to the 8,600 units recorded a year ago. In the first half of 2020, total sales reached close to 20,000 units, still a decent figure compared to 22,000 units a year ago.
If we dissect the data further and focus on the price segments of the more popular projects in the first half of 2020, it’s obvious that the mid-income, upscale and luxury units dominated. The three price segments covered 81 percent of total take-up in the pre-selling market in the first semester, higher than their 71 percent share in the same period a year ago. Note that these segments are priced P3.2 million a unit and higher.
We also saw price increases for selected pre-selling luxury projects in Mandaluyong, Quezon City, Makati fringe, and Ortigas Center in the first six months of the year.
Colliers Philippines believes that a stable sector during the period is the luxury market. Under this segment, condominium units are priced at P8 million to P20 million a unit while the ultra-luxury projects are those priced upwards of P20 million a unit.
Despite the pandemic and the lockdown which resulted in an economic slowdown, the luxury condominium market showed resilience in the first six months of 2020. Of the total launches in Metro Manila in the first half, the luxury and ultra-luxury segments only accounted for 7 percent. However, it covered 19 percent of total sales in the pre-selling market during the said period.
Over the past two years, the luxury segment accounted for 22 percent of total pre-selling take up in Metro Manila, next to the mid-income segment, which covered 42 percent.
Colliers Philippines attributes the good sales performance in the first six months of 2020 to attractive payment terms offered by developers. We see these flexible schemes being extended to buyers of mid-income and ultra-luxury projects. In our opinion, the developers’ shift to digital platforms also chipped in. Colliers Philippines believes that the pace of take up indicates that there is liquidity in the market.
So far, we are seeing a slower pace of drop in overseas Filipino worker remittances while unemployment is starting to ease. These should have a positive impact on the residential market across Metro Manila, including Ortigas Center. Colliers Philippines believes that OFWs partly drive the demand for mid-income residential units in the country.
Among the submarkets in Metro Manila which are popular battlegrounds for upscale and luxury units include Makati central business district, Fort Bonifacio, Bay Area and Ortigas Center. In Ortigas Center, for example, condominium projects classified as mid-income to luxury have an average take up of about 95 percent.
Ortigas Center is one of the oldest business districts in Metro Manila but has remained a viable location for office and residential projects. In our opinion, this attractiveness will further be sustained by the development of new infrastructure projects.
In 2019, Colliers Philippines released a report on the proposed Mega Manila subway entitled “All aboard: The impact of Manila’s subway on the strategies of property developers.” The project, one of the most expensive to be approved under the current administration, is likely to further raise interest in condominium projects across Metro Manila, especially those near the proposed stations.
The project will have two stations in Ortigas Center. In our view, the completion of these proposed stations will contribute to the competitiveness of Ortigas Center and result in a further redevelopment and differentiation of office and residential projects in the business center.
The implementation of the P393 billion subway should further help provide access to properties that could be redeveloped into mixed commercial, residential and institutional projects. Colliers also sees this infrastructure project raising the prices of land and properties within a kilometer from the subway’s stations.
Another crucial project is the Ortigas-BGC Link. It will connect and significantly reduce travel time between two major business hubs, Bonifacio Global City and Ortigas Center. The P5.7 billion project aims to decongest Edsa and C-5.
Recovery in office leasing
At present, we are seeing challenges in the office leasing market, but a number of government agencies and credit rating agencies are projecting a faster economic growth for the Philippines in 2021. This should be supported by economic recovery of other countries that outsource services from the Philippines.
From 2020 to 2024, Colliers projects the delivery of about 590,000 sqm of new office space in Ortigas Center, which comprise about 18 percent of new supply in Metro Manila during the period. The recovery in office leasing should help lift residential demand in the business district.
Condominiums in integrated communities
All these factors will be complemented by the need to be in an integrated community. Condominium investors and end-users, for instance, have become more aggressive in scouting for properties that are within estates.
Colliers believes that in the next 12 to 36 months, the demand for residential projects will likely hinge on integrated features, i.e. residents having immediate access to essential goods and services. The pandemic and physical distancing protocols further underscored the need to have immediate access to health services and facilities. Hence, Colliers recommends that developers highlight the integrated features of their residential projects and for investors to continuously look for projects within estates.