By Beatriz Marie D. Cruz, Reporter
PRIME RESIDENTIAL prices in Manila rose by 9.1% year on year in the second quarter, ranking the Philippine capital fifth among global cities for price growth, according to the latest edition of Knight Frank’s Prime Global Cities Index (PGCI).
This represents a slowdown from the 26% year-on-year surge recorded in the same period last year, when Manila topped the global rankings.
The PGCI is a valuation-based index that monitors prime residential price movements in 46 cities worldwide, using data from Knight Frank’s global research network. It measures nominal prices in local currency.
Year on year, Manila’s prime residential price growth trailed only Seoul (25.2%), Tokyo (16.3%), Dubai (15.8%), and Bengaluru (10.2%), but outperformed Mumbai (8.7%), Bangkok (7.1%), Madrid (6.4%), Nairobi (5.6%), and Zurich (5.4%).
Manila’s prime residential prices grew faster in April-June than the 1.6% decline recorded in the first quarter.
Over the past five years, Manila ranked among the top markets in terms of real estate price growth at 77.5%, behind only Tokyo (120%), Dubai (107%), Seoul (80.9%), and Miami (80.3%).
Manila’s five-year price growth also outpaced that of Los Angeles (56%), Christchurch (43.9%), Gold Coast (34.2%), Shanghai (32.8%), and San Francisco (32.6%).
“Emerging hotspots like Manila and Christchurch highlight increasing investor appetite in secondary cities,” Knight Frank said.
“Asian cities continue to lead the rankings, but with less vigor than in previous quarters,” it added.
Manila’s prime residential prices also outpaced the 2.3% global price growth in the second quarter.
“We’re seeing a more fragmented market, with some European cities showing surprising strength while former high-flyers in Asia begin to level off,” Liam Bailey, global head of research at Knight Frank, was quoted as saying in the report.
Another analyst commenting on the report, Joey Roi H. Bondoc, director and head of research at Colliers Philippines, said strong demand for units amid limited supply may be helping support Manila’s prime residential market.
“The upper luxury, ultra-luxury segments continue to outperform other market segments, especially the mid-income segment, because the latter is very sensitive to mortgage rates,” he said in a phone interview.
“On the other hand, luxury buyers are awash with cash. If they don’t have the cash right now, probably they sell one or two of their units and then buy another luxury unit.”
The luxury residential segment — typically valued at P20 million and above — has only 3% remaining inventory of ready-for-occupancy units, far below the 32% inventory recorded in the lower middle-income segment, Colliers said in its Second Quarter Property Market Report.
“By prime residential prices, they may be referring to newly launched luxury condominiums in the Core Central Business Districts of Makati, BGC (Bonifacio Global City) and Ortigas. These constitute a very small percentage of the total condominium supply in the market, but are the highest priced units,” Roy Amado L. Golez, Jr., director of research and consultancy at Leechiu Property Consultants, said in an e-mail.
In the coming months, Mr. Bondoc expects more property developers to pivot toward the luxury residential segment.
“More developers will become more prudent when it comes to their launches, but they will cater to the luxury market… so, the share of luxury in the total new launches in Metro Manila will continue to increase,” he added.
“I would tend to think that inflation, interest rates and other factors such as financing and the sourcing of high-end luxury materials will continue to nudge pricing upwards,” Mr. Golez also said.
