THE residential property sector is seen to improve next year with expansion expected outside Metro Manila, while the retail sector will continue to recover, a real estate adviser said.
David Leechiu, founder and chief executive officer of Leechiu Property Consultants, Inc. (LPC), said “the residential sector still has room for growth in 2024, but it will be a more decentralized growth” as locations outside Metro Manila have become more attractive.
The attractiveness comes from the desire for more space, higher affordability of the projects, improvement in connectivity in the areas outside Metro Manila, and the holistic lifestyle offered by township developments.
“The attributing factors would be infrastructure, the appetite of developers for developing outside core areas, the appetite of buyers and tenants to move their operations and livelihood outside Metro Manila,” Mr. Leechiu said in an e-mail interview.
The residential condominium market has sold 40,555 units during the fourth quarter, LPC said in a statement last week.
“The ensuing market decline prompted developers to offer buyer-friendly payment terms to stimulate demand. However, these measures also increased backout risk. In 2023, developers reassessed their sales strategies to balance between increasing sales and mitigating buyer attrition,” the company said.
With the expected growth, Mr. Leechiu said residential demand is likely to be driven by the information technology and business process management sector, remittances from overseas Filipino workers, and the overall Philippine economy.
In a statement last week, the World Bank projected that remittance flows to the Philippines would grow by around 5% to $42 billion next year as the demand for Filipino migrant workers remains strong.
“On the supply side, launches in Metro Manila will likely pick up again after developers reach a manageable inventory level from previously launched projects. For now, developers may be giving more attention to projects outside Metro Manila,” Mr. Leechiu said.
Meanwhile, the retail property sector is expected to continue to recover as mall owners and operators incorporate “a more experiential space for mall-goers,” which makes it a venue for therapy, entertaining, and socializing.
“Currently, we still see a lot of vacant retail space, and it looks like more developments are coming by next year that will add on to that. So, we foresee a significant level of competition in making space more attractive to mall patrons — to, in turn, encourage tenants to open shops,” Mr. Leechiu said.
Amid the projected growth and recovery, he said that looming geopolitical uncertainties, possible rise in inflation, and increases in interest rates might pose potential risks.
Mr. Leechiu, meanwhile, is looking forward to the reform of the property valuation system as it will facilitate more efficiency and will establish a single valuation base for property-related taxes.
In July, Congress said it was aiming to pass 20 priority bills by the yearend, which include reforms to real property valuation.
The Real Property Valuation and Assessment Reform Act seeks to reform the real property valuation system to allow local government units (LGUs) to better sustain themselves via property taxes.
The proposed law mandates the Bureau of Local Government Finance of the Department of Finance to develop, adopt, maintain, and implement uniform valuation standards, which are to be used by appraisers and assessors in the LGUs and other concerned parties in the appraisal or valuation of land, buildings, machinery and other real properties for taxation and other purposes.
“This will expedite transactions, promote more efficient exchange of properties, and support the growth of the real estate industry,” Mr. Leechiu said.
Real property taxes in the Philippines are independently determined and collected by LGUs, particularly cities and municipalities.
“We think next year will be a year of substantial expansion outside Metro Manila, ushered by the heavy mobilization of infrastructure projects,” Mr. Leechiu said.
“Developers are seeing a lot of interest from residential buyers as well as commercial locators establish their homes in more cost-effective spaces — that are also less congested,” he added. — Sheldeen Joy Talavera
