MANILA, Philippines - An area in Metro Manila may see property prices double in just five years, according to research firm Cuervo Far East.
In an independent study, Cuervo Far East said it sees property values of high-end residential lots in the "Southern Manila West Growth Area" soaring to around P100,000 per square meter by 2019.
The "Southern Manila West Growth Area" is described as parts of Las Pinas and Muntinlupa on the west section of the South Luzon Expressway (SLEX).
"The Southern Manila WGA was identified based on an active increase in historical market values posting an average of 20 percent per year since 2009. While for the next five years, we made a conservative projection of a 10 to 15 percent rise but could definitely go further," Cuervo Far East President and CEO Jose Maria C. Fernandez-Cuervo said.
The study looked at the market values of lots in villages in Southern Manila West Growth Area -- Ayala Alabang Village, Alabang Hills Subdivision, Hillsborough Subdivision and Ayala Southvale -- between 2009 and 2014.
Citing data based on zonal values conducted by the Bureau of Internal Revenue (BIR), Cuervo Far East said the land values in these villages have jumped from as low as P14,000 per square meter in 2009 to as high as P62,000 per square meter in 2014.
For instance, in 2009, lots in Ayala Alabang's market values ranged from P30,000 to P32,000 per square meter, and in 2014, this jumped to between P57,000 to P62,000 per square meter.
Lots in Alabang Hills Subdivision, on the other hand, had market values of between P14,000 to P16,000 per square meter in 2009. In 2014, market values more than doubled to between P38,000 to P40,000 per square meter.
For an upper mid-end residential lot, Cuervo projected values could reach between P48,000 to P64,000 per square meter by 2019 at an average growth of 10 percent a year. At 15 percent average growth, market values can jump to P60,000 to P80,000 per square meter.
For a high-end residential lot in the area, the research firm projected land values could reach between P80,000 to P96,000 per square meter by 2019, at an average 10 percent annual growth.
At a 15 percent annual increase, Cuervo Far East projected property values of high-end residential lots in the area could jump to between P100,000 to P120,000 by 2019.
"An expected increase in zonal values in the near term will affect the cost of sales for land which will result in higher asking prices," Cuervo said.
New developments and infrastructure projects could push the market value of the land higher.
The Cuervo study cited the new road networks, as well as various projects being developed by major developers such as Ayala Land, Megaworld and Filinvest in southern Metro Manila as some of the reasons why land values have steadily appreciated in the area.
The study also took note of the various infrastructure projects in the area, such as the Manila-Cavite Expressway; SLEX-Daang Hari Road; Muntinlupa-Cavite Expressway; and the Cavite-Laguna Expressway. The MCX is expected to open by the first quarter of 2015, while the CALAX project is being auctioned again by the government.
"These new road networks will offer new routes to motorists and can minimize the traveling time going to Manila, various Philippine ports, airports, and nearby central business districts by almost half of their current time," the study said.
Another reason for the appreciation in land values, Cuervo said, is that southern Manila is relatively at low risk of flooding and landslides.
"The accessibility, geohazards, and new developments or facilities brought about by some of the biggest real estate developers also create a deep impact on the land values in Southern Manila WGA. These are some of the biggest factors that attract investments," he said.
Plus, the lack of available supply in the area is also seen to affect capital values.
"Due to the lack of available supply in this sector, we believe that demand forces in the market will greatly affect capital values in the next five years," the study said.
However, Cuervo Far East said the land values of high-end residential lots in the Southern Manila West Growth Area would only continue to increase by 10 to 15 percent annually "provided all infrastructure projects and other developments are completed on time."