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The Bangko Sentral ng Pilipinas (BSP) reported that residential prices in the Philippines have increased for the third consecutive quarter. In its first-quarter report, the BSP announced that residential real estate prices have steadily climbed by 12.4 percent year-on-year. Records also show that this is the highest growth rate since the first quarter of 2016.
“This is the third consecutive quarter that the index has registered a double-digit growth, which is higher than the 10.2 percent growth in the previous quarter and 3.3 percent a year ago. This is also the highest growth rate since Q1 2016,” the central bank said in a statement.
Local residential real estate prices are also 10.2 percent higher when compared to the same period last year. The Residential Real Estate Price Index (RREPI) is used as an indicator for assessing the real estate and credit market conditions in the country. The BSP has been releasing the report since the first quarter of 2016.
According to KMC Research, Manila also records one of the highest residential rental yields in Asia. Condominiums can experience higher yields even with the existing discount of 10-15 percent for ready for occupancy and preselling units.
Unlike the observed telecommuting trend in the US, data also shows that almost 50 percent of renters are employed by the BPO sector. The huge addressable market of the young workforce also values the said lock-and-go lifestyle and conveniences of the CBD, making Manila rental properties an excellent long-term investment.
Similar to the majority of the sectors under the Philippine real estate industry, economic activities involving residential properties are in a wait-and-see position amid the pandemic. “As the Philippine economy continues to adapt and adjust to the ‘new normal’, regulatory changes are forcing capital markets to innovate and undertake initiatives to ensure cost-effective and efficient compliance to keep businesses afloat,” KMC Senior Research Manager Fred Rara noted.
As community quarantines and lockdowns continue to affect businesses and employment, a weaker streak of residential purchases for the rest of the year is projected. "Currently, the absence of transactions has put market players on a wait-and-see stance; although we expect valuations to start slipping if existing economic conditions linger. current valuation,” Rara added.
Given this forecast, residential property owners are now taking advantage of the current valuation and prioritizing to liquidate their properties. Owners of condominium units are capitalizing on the opportunity and listing their properties for sale to maximize profits.
In the long run, investing in and leasing out residential properties will sure become an attractive, stable option for most homeowners or prospective buyers as the real estate market continues to be resilient, and contribute to the Philippine economic recovery.
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