Colliers: Leisure projects to spur demand for residential assets
Leisure projects may be the key to keeping the residential sector afloat and spurring demand that had been depressed by elevated interest and mortgage rates, according to Colliers Philippines.
In its latest property market report, the real estate investment management firm said developers should take advantage of growing demand for resort or “leisure-oriented” properties, particularly condotels, especially as the government aimed to boost tourist arrivals in the country.
“National players should seize the rising demand for condotels and take advantage of the rising influx of international tourists, a potentially huge market for resort and leisure-themed condominium developments,” Colliers research director Joey Bondoc said during a briefing earlier this week.
A portmanteau of the words “condominium” and “hotel,” condotels allow unit owners to make a profit out of their properties by having these rented out by tourists or long-term tenants. Developers of these condominiums also get a share from the service.
This comes after residential vacancy in Metro Manila rose to 17.4 percent in the third quarter of 2024 due mainly to more Philippine offshore gaming operator employees leaving their units in the Bay Area, Colliers data show.
For the entire year, Colliers projects residential vacancy in the capital region to reach 17.7 percent, up by 0.9 percentage points from the previous year.
Apart from offering leisure properties, developers should also work to improve and upgrade their amenities to entice interest, Colliers said.
The company found that 80 percent of prospective homeowners wanted “greener” and more open spaces in their properties.
“This is one of the major reasons why we’re still seeing greater, better take-up for the upscale, luxury and ultra-luxury projects,” Bondoc said. “These are features that are becoming the norm, especially for the higher priced segment.”
Unsold units
Data from Colliers show that as of the third quarter, there were 27,200 unsold condominium units in Metro Manila. Of the total, 32 percent are in the lower mid-income segment; 25 percent, upper mid-income; and 24 percent, affordable.
The economic segment accounted for 13 percent, while the upscale and luxury segments accounted for 3 percent and 2 percent, respectively.
Colliers previously noted that those in the luxury segment had lower vacancy rates because these are typically unaffected by elevated interest rates.
While the Bangko Sentral ng Pilipinas has already cut the benchmark interest rate of banks by 50 basis points to 6 percent, Bondoc said the real estate sector may not feel its impact until mid-2025, as mortgage rates and land value in Metro Manila remained high versus the provinces.
Still, he said developers and investors “are banking on the central bank’s decision to cut interest rates to resuscitate a slumping Metro Manila residential market.”
