By VG CABUAG – Business Mirror
THE residential market may soften this year as companies adjust prices upwards to factor in the rise in rates since last year, according to Leechiu Property Consultants.
Roy Amado Golez, the company’s director for research and consultancy, said developers now are hard pressed to raise prices in order to lessen the difficulty brought by the Covid-19 pandemic and the high consumer prices that started last year.
“The interest rates will require them to start adjusting prices, which might impact their selling prices. We might see a softening of the market on that end,” he said during the company’s briefing.
At the same time, he said banks have also started to stretch out their lending terms to borrowers, offering terms of 20 years instead of the usual 15 years for long-term lending, in a move to help mitigate for buyers the higher pricing.
“Now we’re seeing banks bring that up to a term of 20 years, and this has helped mitigate the cashflow from the buyers perspective,” the company said.
For the first quarter of the year, a total of 12,037 condominium units were sold, more than double from last year.
Eleven new towers were launched for the period, equivalent to 4,931 units in the supply pipeline in the first quarter.
“Residential sales are back, developers likely to pull back lenient buyer screening and payment terms to also address cancellation concerns,” the company said.
David Leechiu, the company’s president, remains hopeful of a resurgent take-up of space by the Philippine offshore gaming operators (POGO) in the office segment as the sector sees the Philippines “as a land of opportunity.”
“And just like what Senator Chiz Escudero was saying, that the plus side about the POGO sector is that it addresses the gambling sector without tapping into the local market. Unlike the local casinos where 70 percent of the market of all the brick and mortar casinos are catering to local gamblers,” he said.
The company said the office segment of the realty market just posted its third best performing year since the start of the pandemic, with space demand reaching nearly 1 million square meters last year.
Company data showed that demand shot up in the first quarter of this year, at 264,000 square meters worth of transactions closed, from the previous year’s 124,000 square meters. There was also an additional 497,000 square meters in the pipeline for the next six months.
The bulk of the take-up was from traditional office users, at 144,000 square meters, with the government and serviced offices among the leading contributors to the increase in demand.
The offshore and outsourcing IT-BPM industry, meanwhile, recorded 109,000 square meters, while POGO demand continues to remain stagnant with only 11,000 square meters leased.
Some 73 percent of demand is centered in Metro Manila at 363,000 square meters, while provincial demand is at 135,000 square meters.
A total of 2.6 million square meters of space remain unoccupied in Metro Manila, for an 18-percent average vacancy rate.
Owners of the space are expected to take more pressure as 969,000 square meters more space are completed up until end-2023.