One of the country’s leading firms in the field of real estate consulting services has cautioned property developers that attractive rents and prices for their products are not enough. They also have to be careful with the quality of their offerings as well as efficiency of operations and maintenance.
Pinnacle Real Estate Consulting Services, in its second quarter 2017 report entitled “Flight to Economy and Efficiency,” noted that top developers have been leveraging their sizes to achieve an economy of scale, but while most of them offer attractive rents and prices for their products, one of their eyes would be watching on the quality of their offerings.
The report warned that buyers and tenants will remember unpleasant turnover conditions. In addition, efficiency of operations and maintenance are likewise viewed highly by occupiers, it said.
A piece of advice for would-be buyers, especially those of residential condominiums and office spaces, do not be fooled by the well-designed brochures and flyers and model units. Try to find previous buyers of existing projects of the same developer and ask about their experiences, especially in the area of building and facilities maintenance.
Two residential condominium projects that I have invested in, developed by two of the top property developers in the country, now have dilapidated gym facilities with equipment that are not working, with one or two treadmills that have to be shared by the owners of several buildings, with airconditioning units that do not work.
And why does a parking space have to cost at least P700,000 per unit? Shouldn’t developers subsidize the cost of parking because it is their obligation to help decongest the streets? In the case of affordable condominium projects, many of the unit buyers do not purchase parking slots and are forced to park on the streets.
For our legislators, may I suggest passing a law or amending existing ones to make parking space for each unit a part of the cost of buying a condominium or townhouse unit, but at a subsidized rate.
One of the projects that I have mentioned doesn’t even have a lobby for our building, and so persons with disabilities and even senior citizens have to take two flights of stairs down to get to the elevator. Yes, the other buildings have their own lobby, but you do not expect the residents of our building to pass there just because the buildings are connected on the fourth floor because the guards do not allow it. One of the building’s occupants has already written the developer years ago, but no action has been taken.
Anyway, back to the Pinnacle report.
It observed that office takeup is strong due to the demand from business process outsourcing (BPO) firms, traditional companies, and even government agencies, and that the office sector is characterized by very high occupany levels and stable rents.
It reported that the office market in Metro Manila, as monitored by Pinnacle Research, reached 8.6 million square meters of Grade A office building or better due to the new buildings that came online. Overall vacancy across the various business districts slightly increased to three percent as new buildings are being absorbed by the market.
While the office market is still a landlord’s market due to high occupancy, Pinnacle noted that rents have stabilized with miniscule upward bias. It said the Bonifacio Global City (BGC) and Makati central business districts are still the preferred location of BPOs, but for their secondary offices and expansions, BPO companies would not mind going to other CBDs for lower rent.
Rents in the Makati CBD are stable, where Premium Grade A building rents average P1,400 per sqm per month, Grade A buildings P950 per sqm per month, and for Grade B&C buildings, P720 per sqm. BGC has the same average for Grade A buildings at P950.
Meanwhile, the average rent of Grade A office buildings in Ortigas, Alabang and Bay Area is P680 per sqm per month, while Quezon City office rents are at P700 per sqm per month, owing to newer and fewer buildings.
For the residential market, Pinnacle revealed that based on Bangko Sentral ng Pilipinas (BSP) reports, residential property values grew 1.1 percent in the first quarter of 2017 from a year earlier, a slight increase which means that prices are plateauing.
But the big players are still building due to the huge housing backlog.
Pinnacle Research estimated that the Metro Manila residential condominium projects would reach a total of 240,000 units by the end of 2017, with mall and medium players waiting for the approval of the implementing rules and regulations as well as the price ceiling for vertical socialized projects.
The BSP also reported that universal and commercial banks lent P1.31 trillion loans to borrowers by the end of the first quarter of this year, or an increase of 21.5 percent for the same period last year. This substantial increase shows that there are more people buying, and they are being financed by the banks, Pinnacle said.
Jojo Salas, Pinnacle’s research and consulting director, said real estate developers have been aggressively capturing the demand of the buyers and renters in the past years, and they are not stopping
He projects this steady flight to continue, although the continued growth should be taken with a grain of salt.
“Consumers are looking for high quality products for the most attractive rates. Extra diligence should be put into new products to avoid compressing margins later on due to competition. Most people love flying, and flying in economy class, especially those purchased very early are quite popular among Filipinos. Philippine real estate market will experience this ‘flight to economy’ without sacrificing quality in the coming months,” he added.
Source: http://www.philstar.com/business/2017/08/02/1723634/still-going-strong
