THE appetite for luxury condominiums in the Philippines rebounded strongly despite rising interest rates, according to Colliers.
In a statement, Colliers said the luxury condominium market bounced back in the first nine months of 2022, thanks to strong demand for projects in central business districts such as Fort Bonifacio and Ortigas Center.
The luxury segment, which refers to condominiums priced at P8 million and above, accounted for 28% of total condominium take-up in the January to September period. This is a turnaround from the 1.6% decline seen in the first nine months of 2021.
Colliers said pre-selling condominium take-up rose 7% to 6,100 units in the third quarter, from 5,700 units sold in second quarter. This brought the nine-month take-up to 14,900 units, surpassing the 12,400 units sold in 2021.
Improving consumer and business sentiment will support demand for residential properties, but rising interest rates may pose a risk to this outlook.
The Bangko Sentral ng Pilipinas (BSP) last week raised its benchmark rate by 75 basis points (bps) to 5% — the highest in nearly 14 years. Since May, the BSP has hiked rates by 300 bps to curb inflation and prevent the peso from further depreciating against the US dollar.
“Despite higher interest rates, we have seen a stable demand for upscale to ultraluxury condominium projects in Metro Manila… We believe that the ultraluxury segment will likely remain resilient amid the rising interest and mortgage rates,” Joey Roi Bondoc, associate director and head of research at Colliers, said in a statement.
PRICE INCREASEIn the last few years, Colliers said there has been a “healthy level of price increases” for luxury residential projects.
“We believe that the increase in prices will only result in investors and end-users looking for greater amenities as well as innovative facilities. Due to Metro Manila traffic, there will be greater demand for connectivity to master-planned communities and topnotch concierge services,” Mr. Bondoc said.
As more luxury and ultraluxury projects are launched in Metro Manila, Mr. Bondoc said they see “the rise of more discerning buyers.”
“Hence, developers need to further innovate and differentiate in a highly competitive luxury residential segment,” he added.
According to Colliers, the most expensive condominium project in Metro Manila is at P495,000 (or $8,400) per square meter, “much cheaper” than most expensive condo units in Hong Kong, which is 23 times more expensive. — Cathy Rose A. Garcia