From Risk to Resilience

The Philippine property market may be turning the corner from risk to resilience, according to First Metro Securities' research team led by Mark Angeles and Estella Villamiel.

- MARIANNE GO

In a briefing for members of the Monday Circle at the Westin Manila in Ortigas, First Metro Securities expressed the view that the worst may be behind for the Philippine property sector as key indicators begin to stabilize amid a clouded outlook.

For the residential sector, the outlook still shows a persistent oversupply and elevated vacancy rates, unattractive low rental yields, and lingering risk of cancellations amid elevated mortgage rate, all of which continue to weigh on recovery.

Developers, they observed, have become selective though with project launches, with a clear pivot toward regional markets given higher inventory levels and more resilient demand.

Metro Manila, they acknowledge, remains weighed down by the exit of POGOs, hybrid work arrangements and weak rental yields. Regional demand, on the other hand, is buoyed by decentralization, ongoing infrastructure rollout and greater credit availability.

What First Metro Securities hopes to see in the near future for the residential sector is a faster-than-expected absorption of existing inventory alongside a decline in mortgage rates, improved credit availability (particularly in Metro Manila) and/or stronger return to office mandates.

The demand-side drivers, First Metro Securities believes, will accelerate leasing and sales activity that will help offset supply-side pressures and support property prices.

Residential prices remain broadly supported, but demand remains weak and turnover-related cancellations may exert pressure, the research warned.

For the malls, the outlook is positive as there appears to be a strong rebound, with rising rents and occupancy supported by robust consumer spending and aggressive retailer and credit card promotions that offer upfront discounts, buy now-pay later promos and installment plans as low as zero percent on credit card transactions in malls.