MANILA, Philippines - Demand for residential condominiums will remain strong in 2012, while the office market will continue to be driven by the business outsourcing industry, according to CBRE Philippines.
High-end condominiums will still be in demand, but property developers will start focusing on developing condominiums aimed at the middle market.
"Developers agree that while there is a market for high-end condominiums selling at an average of P100,000 per square meters, the bigger market and greater opportunity is with the pent-up demand for affordable condominiums selling at a price range of P45,000 to P80,000 per square meter depending on the project location," CBRE said in a statement.
Affordable condominium developments will cater to the broad mid-income market, which includes young professionals and families who want homes in Metro Manila, Metro Cebu and Davao.
"The shift from horizontal style housing to the more practical condo type development, with pricing now suited to a much wider range of buyers, shows the progress we are making towards becoming a more competitive economy. We are now getting more value out of each square meter of land, as well as lessening reliance on private transportation brought by developments in the residential market, much in the same way as Hong Kong and Singapore have done before us," said Lui Matti, executive director for CBRE Asset Services.
A total of 105,722 units are expected for turnover this year, while at least 14,112 residential condominium units (around 743,438 square meters of saleable area), are estimated to enter the market in 2012.
"We see 2012 as another buy year for shoppers, with a wide choice of projects each with unique amenities, and access to the right kind of financing," Matti said.
The past decade has been good for the residential condominium market in the Philippines. CBRE Philippines noted a total of 259,380 residential condominium units were launched from 2000 to 2011. Except for 2005 and 2008, when the number of units launched dropped, the total number of condo units has been increasing steadily.
Business process outsourcing companies have been driving the demand for office space. Rental recovery in major business districts such as Makati, Alabang, Quezon City, Fort Bonifacio and Ortigas, has been observed in 2011.
"Increasing rental rates in 2011 have been largely a result of increasing demand for office space by BPOs (business process outsourcing), traditional offices, and the lack of new office supply in 2011," CBRE said.
Despite the higher rents, the Philippines remains the top outsourcing destination because its lease rates are one of the cheapest in Asia.
"The Philippines is one of the most cost effective outsourcing destination n Asia, and we see that the office sector will sustain growth in 2012. The country provides a conducive environment for foreign investors—having an excellent pool of skilled labor, outstanding customer service, one of the cheapest rents, and highest yields elsewhere in Asia,” said Rick Santos, chairman and CEO of CBRE Philippines.
CBRE Philippines said the takeup of leasable office space in 2012 may reach a high of 400,000 sqms in 2012.