Thursday, June 12, 2014

High-end real estate slowing down

According to a study by property consulting firm Colliers International, high-end residential property has and continues to perform well in spite of signs of a slowdown.

The slowdown can be traced to a growing affordable housing segment, with units priced at P1.23 million and below.

Julius Guevara, director for research and advisory at Collins International Philippines, reported that the high-end residential sub-segment's supply matches demand but observed a slowdown by 12 percent during the first quarter of 2013 for the property's primary market.

Guevara says the slowdown can be traced to a growing affordable housing segment, with units priced at P1.23 million and below. The increase in socialized and low-cost housing developments comes from developers' compliance with government requirements in exchange for value-added tax exemptions.

However, construction of these kinds of units is on the rise and there is still a backlog in supply. Colliers recommends developing more affordable properties outside of Metro Manila to answer to the need.

Meanwhile, licenses to sell issued by the Housing and Land Use Regulatory Board (HLURB) saw an increase by 39.7 percent from December 2013 to February 2014. Residential projects amounted to 59 200 units during that same time period, 7 200 units lower than the same period last year.

Even with the slowdown, the luxury and upscale segments of the residential market remained strong.

Colliers Philippines managing director, David Young, says these trends are due to the Philippine real estate's entry into a second decade of a prolonged expansion. In the commercial sector, growth was sustained but there are still not enough commercial spaces being built to build demand from the office sector. This contrasts with the emerging residential sector, says Young, where developers realized that they have built too much, too quickly. 


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