By Paul Vincent Ramirez MRICS
RISING LAND VALUES across Metro Manila’s major business districts indicate recovery in the property market. Although our data show that land values corrected by between 1.7% and 9.8% in 2020, this is attributable to developers holding off on acquiring new parcels of land given the disruptions in the property market.
For 2022, we project land values to rise by 5.1%, which is indicative of a property market that is bound for rebound. We are starting to see a spike in interest in developable land and this bodes well for the property market. Acquiring parcels of land within and outside Metro Manila will be crucial in developers’ pipeline of new projects beyond 2022 as they capture market demand post-pandemic.
All property indicators — from office, residential condo, retail to hotels — are still correcting, but because of scarcity of developable land in Metro Manila’s major business districts, land values, while slightly down from 2019 peak, remain relatively stable and is expected to pick up starting this year barring any severe coronavirus disease 2019 (COVID-19) outbreaks.
We urge real estate developers to remain agile and be mindful of the economy’s recovery prospects beyond the pandemic. They should also be more strategic with their land-banking initiatives if they are to capture pent-up demand.
Furthermore, we believe that the implementation of infrastructure projects will be a major driver of economic growth beyond 2022. We emphasized in a previous report that the completion and upgrading of railways, toll roads, and airports across the Philippines should contribute to higher land and property values; therefore, these projects will play an important role in dictating the development strategies of property firms beyond the pandemic.
BULACAN ON THE RISE
One of the provinces that property developers, end-users, and investors should take a close look at is Bulacan given that two major infrastructure projects are scheduled to be completed in the province from the near to the medium term.
First is the Metro Rail Transit (MRT) Line 7 project, which should contribute to boosting Bulacan’s attractiveness as a residential investment destination. Once completed, this 22.8-kilometer, 14-station railway project is expected to reduce travel time between North Triangle in Quezon City and San Jose del Monte in Bulacan from about 2–3 hours to just 35 minutes, and it can service 300,000 passengers daily once fully operational by the fourth quarter of 2022 (although this target might not be reached right away due to pandemic-related social distancing protocols).
The second infrastructure project that will push up property prices in the province is the Bulacan Airport, or New Manila International Airport. This airport will cover 2,500 hectares of an envisioned 12,000-hectare township and is expected to help decongest Ninoy Aquino International Airport. It is designed to have an initial capacity of 35 million passengers per year, and a target of 100 million passengers per year once fully complete. It is likely to be completed by 2025.
Major government infrastructure projects, especially in sparsely developed areas, have the potential to really unlock property values. Once these projects are completed, these infrastructure corridors are ripe for transit-oriented developments, but as early as now, developers are already starting to position themselves in these areas, which has been observed to have already caused an uptick in land prices.
We expect developers to be more aggressive and strategic now with their land-banking initiatives, especially as they plan to take advantage of the government-projected economic recovery.
And as they seize opportunities, they should also take into consideration key business and economic policies such as the implementation and direction of new infrastructure projects and decentralization initiatives, which should spur more economic opportunities outside Metro Manila.
Paul Vincent Ramirez is Colliers Philippines’ senior director and head of valuation services.