Property market out of recession — study

The Philippine property sector has finally been nudged out of recession phase, Colliers International said in its latest review of the local real estate market.

For the first nine months of 2004, licenses to sell approved by the Housing and Land Use Regulatory Board (HLURB) increased 43 percent year on year to 276,286 units compared to 192,719 units in the same period in 2003.

The increase was highest in the commercial subdivision sector at 299 percent followed by farmlots at 297 percent, industrial subdivisions at 290 percent, and low cost housing at 185 percent. Socialized housing grew 60 percent, commercial condominiums 45 percent, and memorial parks 36 percent while those of mid-income housing and high-residential dipped, the latter due to the flurry of affordable high-rise projects in the past three years.

Vacancies in the Makati central business district (CBD) continued to dip until the end of 2004 as it was posted at 9.5 percent in the fourth quarter as against 9.9 percent in the previous quarter. This year, Colliers expects occupancy to further improve, with the vacancy rate at only seven percent.

Rents in the Makati CBD have likewise grown for the fourth consecutive quarter. Premium grade office rents were up by 11 percent in the course of 2004 to an average of P537 per square meter (sqm) per month. Rents are expected to post a further uptick of 15 percent in 2005 as supply turns tight.

Quarter on quarter, prime land values in the area increased by nearly four percent to an average of P188,375 per sqm.

Developable land values are estimated to have increased by 10 percent in the course of last year as vacancy rates eased in the office sector and rentals are starting to escalate. Quarter on quarter, land values in the Makati CBD increased by nearly four percent to an average of P188,375 per sqm. To date, values have recovered by 10 percent from their 2003 levels. Colliers noted that CBD land values fell by as much as 60 percent from 1997 to 2003.

Land values in both the Makati and Ortigas CBD are estimated to have grown 15 percent last year compared to the previous year. From P156,000 to P220,000 per sqm in the fourth quarter of 2004, land values in Makati are expected to rise to a range of P180,263 to P253,000 in the last quarter of 2005 while those in Ortigas are projected to increase from a range of P60,500-P110,000 in the fourth quarter of 2004 to P69,575-P126,500 towards the end of 2005.