Demand in the residential market remains strong, says CBRE official
Overseas Filipinos and retirees remain the most active buyers of residential property in the Philippines, boosting market demand, a top official of an international real estate services company said.
The bulk of overseas Filipino workers and retirees from around the world residing in the Philippines or considering residence here who invest in the property market target mid-end residential development projects, Mike Mabutol, Director for Investment Properties and Capital Markets at CB Richard Ellis Philippines told delegates to the recent Asia Pacific Marketing Power and Sales Effectiveness property and marketing conference in Macau, China.
Overseas Filipino workers have long been a lucrative market for residential properties because of their desire to provide a better life for their families. According to Mabutol, OFWs prioritize investing their hard-earned income in residential properties.
Retirees have also ramped up property spending, mostly from life savings and retirement benefits. Mabutol said.
“This trend started four to five years ago and now we see these retired buyers becoming more active in the market,” said Mabutol, despite property woes in other parts of the world, in particular the U.S.
To address increasing demand by OFWs and retirees, real estate developers are developing affordable housing developments and condominium projects, with investments ranging from PhP 1 Million to PhP 2.5 Million, according to a CBRE Philippines report. In the period 2008 to 2013, 28 residential condominiums are expected to rise in Makati City, providing more than 18,000 units. In Fort Bonifacio, 33 residential condominiums are expected to be completed between 2008 and 2013, which will provide more than 11,500 units.
High-end residential condominiums are also in demand. As a result of increased demand, prices for high-end residential condominiums in Makati City have risen from Php 90,000 per square meter in 2006 to Php 100,000 to Php 130,000 per square meter this year. Low interest rates and flexible financing terms have helped boost the residential property sector. According to Trent Frankum, CBRE Philippines General Manager, mortgage rates are hovering in a range of 8.5% to 12%.
Another bright prospect for the Philippine residential market is the development and market positioning of retirement villages for expatriate “empty nesters.” Studies show that retirees from the US, Europe and other countries in Asia, such as China, South Korea and Japan are flocking to tropical countries like the Philippines for their retirement. The retirement market is a potential multi-billion-dollar industry, and the Philippines has stepped up efforts to entice foreign and local investments in such projects, Mabutol said.
The Philippine Retirement Authority, a government owned and controlled corporation, and the Philippine Retirement Institute encourage local and foreign investors to support retirement community projects. Road shows in Korea, Japan, and the United States, have promoted Philippine retirement villages, offering tax incentives for pioneering projects in the country.