#philippine real estate
Philippine residential property prices continue to surge
The Philippine residential property market continued to perform spectacularly, amidst robust economic growth. During the year to Q2 2015, the average price of a luxury 3-bedroom condominium unit in Makati central business district (CBD) surged 7.91% (6.61% inflation-adjusted) to PHP149,300 (US$3,179) per square metre (sq. m.), according to Colliers International .
During the latest quarter, condominium prices in Makati CBD increased 1.35% (1.1% inflation-adjusted) in Q2 2015.
Other major CBDs in Metro Manila, the country’s capital, also showed strong house price rises.
- In Rockwell Center. the average price for a 3-bedroom condominium rose by 11.5% (10.2% inflation-adjusted) to PHP158,000 (US$3,364) per sq.m. or a 3% q-o-q growth.
- In Bonifacio Global City. the average price for a 3-bedroom condominium increased by 9.7% (8.4% inflation-adjusted) to PHP148,000 (US$3,151) per sq. m. or a 1.2% q-o-q rise.
Demand remains strong. Residential real estate loans in the country soared by 25.9% y-o-y to PHP411.44 billion (US$8.76 billion) in Q1 2015, according to the Bangko Sentral ng Pilipinas (BSP), the country’s central bank.
Residential property prices in the country’s CBDs are expected to continue rising in the coming year.
Since Benigno (Noynoy) Aquino III became president in June 2010, he has instituted a no-holds barred anti-corruption and good governance campaign which has wowed foreign investors and caused consumer confidence to surge. Rising investment, plus low interest rates, have increased condominium prices by 42.2% (22.6% inflation-adjusted) between Q3 2010 and Q4 2014. Property prices have risen as much as 113.3% (34.1% in real terms) from 2004 to 2014. Philippine property experienced the fourth highest price rise in the world during the year to Q2 2015, according to the Global Property Guide’s Q2 2015 report .
The Philippines is now one of the fastest growing economies in Asia, with 6.7% growth forecast by the IMF for 2015, almost at par with China’s 6.8%. Moody, Standard & Poor’s, and Fitch Ratings, all affirmed the Philippines’ investment rating upgrade to investment grade, amidst strong economic growth and efforts to curb corruption. Based on the Global Competitiveness Index of the World Economic Forum (2014-2015), the Philippines ranked 52 out of 144, up from 59 and 65 in the past two years.
However, all these improvements depend partly on the political environment. The next presidential election is less than a year away. The fate of the housing market and the economy as a whole will significantly depend on who will be elected as the next president of the Philippines. The Philippine one-term presidential system reposes enormous power in the hands of the president, and a repeat of the disastrous experiences under presidents Joseph Estrada (1998-2001) or Gloria Macapagal-Arroyo (2001-2010) could reverse many gains made by the present administration.
In the second quarter of 2015, the Philippine economy grew by 5.6%, up from the growth of 5% in the previous quarter, but down from last year’s 6.7% growth, amidst a regional slowdown, based on figures from the National Economic and Development Authority (NEDA). Economic growth is expected of between 6% and 6.5% this year, after GDP growth rates of 6.1% in 2014, 7.2% in 2013 and 6.8% in 2012.