While many condominium buyers tend to focus on central business districts (CBDs) so they can be closer to their offices, property analysts said those looking to buy for investment (either to rent out or sell when prices rise), may find more opportunities buying a condo outside the CBDs.
In its market report for the second quarter of 2017, property consultancy Colliers International Philippines revealed that they see potential in residential condominium projects located outside of the three major CBDs in Metro Manila: Makati, Bonifacio Global City (BGC) and Ortigas Center due to the lower prices and potentially faster capital appreciation.
“We recommend potential buyers, investors and tenants to consider areas outside CBDs,” wrote Dinbo Macaranas, senior research manager at Colliers, in Colliers’ residential market report for Q2 2017. “This is because these alternative locations offer competitive rents and prices, as well as better capital appreciation potential given the availability of developable land in these locations and the impact of future infrastructure improvements.”
He highlighted major developments in Pasig, Malugay Street in Makati and the Manila Bay Area with capital appreciation growth ranging from five percent on one quarter to 21 percent on the next quarter. In contrast, he noted that prices seem to be plateauing in residential properties within the major CBDs. For Q2 2017, Colliers noted a slowdown in the capital appreciation of condominiums in Makati CBD and BGC.
As a result, income from residential rentals in these CBDs have been declining. But Macaranas is quick to clarify that the Philippines’ overall yields is still among the highest in Southeast Asian countries at 5.5 percent, second only to Vietnam’s 5.7 percent.
Macaranas urges investors to look at residential developments in other locations. Colliers noted that for the first half of 2017, around 84 percent of residential project launches were located outside the major CBDs. Projects in Quezon City, Parañaque, and Manila as examples of big-name property developers moving outside of the major CBDs.
“The areas outside of the metro’s major CBDs where these affordable and mid-income projects are located are emerging as growth areas,” wrote Macaranas in the report. “The lack of developable land in CBDs has naturally pushed the development outward.”
Macaranas added that such factors make these areas an alternative opportunity for property buyers and investors. “If you compare them, there’s essentially a discount between the major CBDs and the areas outside CBDs,” he said. “That’s why there’s an opportunity there that we see that buyers and investors can take advantage of.”
This story originally appeared on Entrepreneur.com.ph.
* Minor edits have been made by the Femalenetwork.com editors.