| Photo from www.concreteconstruction.net/ via SDerodar
A lot of us are quite familiar with the phrase, Build, Build, Build. From the developers’ perspective, conceptualizing a building plan to deliver it to completion is a clear definition of business. They build one building after completing another, and in most cases, they construct multiple buildings simultaneously. For investors and end-users, it provides a choice of which alternatives are available.
While it is true that the pandemic has caused a reduction of the overall construction, Colliers Philippines project delivery of 7,270 new units in 2021, up 21% from 6,000 units in 2020. More than 75% of the upcoming supply will likely come from the Bay Area, as selected projects in 2020 were delayed to 2021 due to temporary work stoppages. As for Jones Lang Lasalle’s (JLL) 3rd Quarter 2021 Metro Manila report, residential condominium supply stood at 412,200 units as of 3Q21, wherein they completed 5,100 units from three developments during the quarter. Despite the completions recorded, they delayed around 4,400 units, wherein approximately 91% slipped to 2022.
Clearly, construction “must” go on despite the pandemic as the Philippines benefitted from all the economic activity as seen in several locations. Building developments abound as an indication of a robust residential property sector due to rapid urbanization, that is, whether or not we are experiencing a pandemic. In fact, as for market share, Jones Lang La Salle reports that Quezon City and Makati City lead the market share for RFO developments on the back of large housing multi-tower, high-density developments. Meanwhile, Quezon City still led the pre-selling landscape, wherein they categorized the majority under the midscale segment.
Not going far, as an example, living in Makati for about seven years, it was so typical for me to notice construction from almost any available spaces even within a half-mile radius. Construction had been going on simultaneously in Pasay Road, Dela Rosa Street, Pasong Tamo, Legazpi Village, Salcedo Village, Makati Avenue, etc., while Bonifacio Global City and the Bay Area were having massive construction phenomena at the same time. Years later, Century City had its share of the residential and commercial complex development within a specific Makati Avenue and Circuit Makati in former Sta. Ana racetrack. Almost every known space is converted to housing construction by and large.
“As you may know, some properties sell quickly owing to location, amenities, and of course, builders’ reputation. They expect any Makati building to sell out fast, and inventory is gone even before the structure could top off or get erected. In more prominent developers, letters of intent become a norm for priority sales.”
What’s even not surprising is to know that some well-known buildings, residential or commercial, are demolished to give way to new building construction. Wasn’t it big news to learn that they had to demolish the Mandarin Hotel on Makati Avenue to raise an upscale property? What about the old Tuscany Condo that had to get vacated to what is now Discovery Primea. And who wouldn’t forget the section of Glorietta rezoned as a residential complex, giving residents the choice of multiple access points to and from main Makati City thoroughfares. The Raffles Hotel and the Park Terraces are among the prime buildings in the area. In our eyes, that is classic Build, Build, Build.
As a property specialist, often, when receiving inquiries about pre-selling properties, it is noticeable how inventory is selling fast that since there is usually an average of 300 units in a building, they quickly sell it out. As you may know, some properties sell quickly owing to location, amenities, and of course, builders’ reputation. They expect any Makati building to sell out fast, and inventory is gone even before the structure could top off or get erected. In more prominent developers, letters of intent become a norm for priority sales.
It wasn’t surprising for me to learn that the price comparison of units in high zonal values locations is that high due to land banking scarcity. Building costs are way higher due to land values within certain areas, especially since developers have to incur land acquisition costs. Expect that they will locate more upscale buildings in highly-priced land values such as where you find top commercial centers, finance centers, international hotels. But in general, pre-selling markets across market segments are experiencing gains constantly in appreciation or price increases. As Jones Lang Lasalle (JLL)reported, price appreciation is also observed in the pre-selling market, with average prices climbing up to PHP 218,800 per sqm, up by 3.1% q-o-q. Developers offer more flexible payment terms to offset the price increase, particularly for developments with farther completion years.
The Bonifacio Global City (BGC), another example of a successful Build, Build, Build, where you can find international brand properties, has turned into a vibrant urban development. Residential buildings abound with a mix of retail, hotel, and finance centers. BGC has developed dramatically over the past few years, featuring state-of-the-art and eco-friendly residential and office buildings. Its planned infrastructure has larger open spaces and cables that run underground, keeping the city less unkempt. In Taguig City, BGC boasts of a total of 613,343 residents per square mile. The majority of the BGC market consists of people who both live and work in BGC. Predominantly, they are composed of foreign expatriates, the local upper-middle class, and international students.
“Build, Build, Build may have a connotation for continuous development, progress, and ongoing property proactivity. Shouldn’t we all embrace it?”
If the subject parallels the current government infrastructure drive, I would agree that completing and upgrading railways, toll roads, and airports should contribute to higher land and property values. Even more, it provides additional benefits to areas where accessibility to properties and developments is well appreciated. At inception, they are envisioned to increase the economy’s productive capacity, create jobs, increase incomes, and strengthen the investment climate leading to sustained, inclusive growth.
Building more and more residential structures is inevitable. Yet, a progressive economy should strive to implement outstanding urban planning to accommodate growth and promote sustainability in enhancing values, ensuring security, and providing a good investment atmosphere.
From stories told by friends in the industry, there was a time that people would line up to purchase properties just because of the limited inventory and few construction buildings back then. Today, it’s different, and there are more choices available. There are more locations to invest in and multiple ways to strategize investment, whether end-user, rental, holding inventory, resale, etc. Remember, real estate appreciates in no time, or if you are patient enough, the longer you have it, the pricier it gets.
Build, Build, Build may have a connotation for continuous development, progress, and ongoing property proactivity. Shouldn’t we all embrace it?
(Stevenson’s experience in Philippine Real Estate spans more than 15 years. He has been involved in horizontal, vertical, vacation, and commercial properties. He has worked as an International Property Specialist to markets in Asia, Europe, and North America with Ayala Land, Federal Land, and Century Properties. Through PhilHouseHunters, he offers real estate investment opportunities, marketing, and consultancy with a key focus on Metro Manila and Mega Cebu areas. Visit www.philhousehunters.com. Email at firstname.lastname@example.org.)