Residential property developers in the Philippines have been advised to diversify their projects geographically, as data reveals a stable demand for residential units outside Metro Manila. According to Colliers Philippines, the take-up rate for residential units outside Metro Manila has been increasingly positive, with areas such as CALABARZON, Central Luzon, Central Visayas, and the Davao region showing consistent growth. This diversification is seen as a key strategy for mitigating risks and tapping into emerging markets that demonstrate potential for high returns.
Current Market Trends and Inventory in Metro Manila
As of the third quarter, Metro Manila had an unsold inventory of 75,300 units, with an estimated 5.8 years to fully sell out. This oversupply is causing developers to reconsider their focus on the capital, where the demand for new residential projects has slowed in comparison to regional markets. Despite the size and urban allure of Metro Manila, the stagnation in residential sales has prompted developers to explore new areas for expansion.
In contrast, horizontal residential projects in the provinces have demonstrated more favorable conditions. Areas such as CALABARZON, Central Luzon, Central Visayas, and Davao have seen annual price increases of 4% to 7% between 2016 and 2023. These regions are benefiting from improving infrastructure, greater accessibility, and increasing demand from families and workers seeking more affordable and spacious living options compared to the highly urbanized and expensive Metro Manila.
Why Diversification is Key for Residential Developers
With a rising unsold inventory in Metro Manila, developers are now looking beyond the capital to capitalize on untapped markets in other regions. Geographic diversification allows developers to spread risks, adapt to changing market conditions, and access new opportunities. Expanding into these emerging markets provides a means of sustaining business growth while maintaining a competitive edge.
The regions outside Metro Manila, particularly those that have experienced a robust price increase in recent years, are becoming increasingly attractive to both homebuyers and investors. CALABARZON, due to its proximity to Metro Manila, has seen rapid infrastructure development, making it an appealing choice for those seeking a balance of accessibility and affordability. Meanwhile, regions such as Davao have enjoyed strong economic growth, spurred by investments in both tourism and business sectors, leading to an expanding middle class with rising purchasing power.
How Real Estate Professionals Can Capitalize on This Trend
Real estate professionals play a crucial role in identifying and advising clients about emerging markets outside Metro Manila. This trend of geographic diversification is an opportunity for real estate agents to expand their portfolios and enhance their service offerings.
To succeed in this shift, real estate professionals must:
- Understand Regional Dynamics: Being well-versed in the unique characteristics of regional markets, such as local demand, infrastructure developments, and consumer preferences, is essential for success.
- Leverage Technology: Using advanced tools and market data analysis will be key to identifying rising hotspots and making informed investment decisions. Digital platforms can provide real-time insights into property price trends, buyer demographics, and the most sought-after areas for residential development.
- Build Local Networks: Establishing connections with local developers, government officials, and business leaders can provide valuable insights into future trends and opportunities in emerging markets.
- Adapt Marketing Strategies: Tailoring marketing strategies to cater to the tastes and needs of regional consumers can help developers and agents better connect with their target audience.
Looking Ahead: The Future of Residential Development in the Philippines
As the demand for residential properties in Metro Manila faces a slowdown, the key to continued growth in the Philippine real estate market will lie in geographical diversification. Developers and real estate professionals who recognize the potential of regional markets will be better positioned to take advantage of the growth outside the capital. By understanding market dynamics, leveraging technology, and adapting to shifting consumer preferences, real estate professionals can expand their businesses and contribute to the development of the Philippine real estate sector in a rapidly changing landscape.
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