By Krista A. M. Montealegre
National Correspondent

CHINESE nationals are adding fuel to residential condominium demand, as property developers look to add record new supply in Metro Manila this year.
Real estate firms Ayala Land, Inc.; DMCI Project Developers, Inc. and D.M. Wenceslao & Associates, Inc. are seeing a shift in demand on higher sales from Chinese buyers, who now account for majority of sales to foreigners.
While the Constitution prohibits foreign nationals from owning land, Republic Act No. 4726 or the Condominium Act of the Philippines allows foreigners to acquire condominium units and shares for up to 40% of the total stock of a Filipino-owned or controlled condominium corporation.
“We are seeing a significant shift in buyers. Dati OFW ang bumibili sa market pero ngayon mahal na presyo… pasok naman ang mainland Chinese (overseas Filipino workers used to dominate the market, but prices have been going up… in come mainland Chinese). For how long it is going to last, I don’t know,” DMCI Holdings, Inc. Chairman Isidro A. Consunji said in a recent telephone interview.
Generally, higher residential sales to foreign investors drive up real estate prices, making them too expensive for locals.
Colliers International Philippines Managing Director Richard T. Raymundo, however, said the advent of Chinese buyers has brought stability to an industry flooded with massive supply.
“It is also a good thing that you have this segment that is taking up the condo units. It helps the prices to be stable and go up so you’ll see some capital appreciation,” Mr. Raymundo said in a phone interview.
Total condominium stock in major central business districts in Metro Manila reached 101,500 units by the end of 2017, with a record 27,200 units expected to be added to the supply this year, according to data provided by Colliers.
The new supply is projected to put upward pressure on vacancy rates, hitting mid-teen levels by yearend although this will slide back to the pre-teen range with fewer completions expected in 2019 and 2020, Colliers said.
“You now have a new segment that is leasing and buying the units. Those who bought condominium units three to four years ago are finding a market for lease or sale. Otherwise, that’s a lot to take up in a year,” Mr. Raymundo said.
Demand from Chinese investors is anchored on the strength of Philippine online gaming operators (POGOs) that took up 312,000 square meters of space or a third of total transactions in the office sector last year.
“Mainland Chinese companies are into gaming and they have a residential requirement,” Mr. Raymundo explained.
Demand from POGO operators seems sustainable for now, with an initial scan of the office market indicating that the segment continued contributing 30-35% to total transactions in the first quarter of 2018, Mr. Raymundo said.
Demand from POGO is strengthened by the country’s warmer relations with China under the administration of President Rodrigo R. Duterte.
D.M. Wenceslao., whose residential projects are mostly in the Bay Area where POGO companies are allowed to operate, are seeing Chinese nationals take up 60% of sales to foreigners, its Chief Executive Officer Delfin Angelo C. Wenceslao said.
DMCI Project Developers, operating under the DMCI Homes brand, earlier reported that Chinese nationals accounted for more than half the company’s overseas sales in the first quarter of 2018. Overseas markets contribute half to reservation sales.
Kung hindi namin pipigilin baka umabot ng 90% (If we did not temper offers, Chinese nationals could have accounted for up to 90%). No kidding,” DMCI Holdings, Inc. President Isidro A. Consunji said.
Property giant Ayala Land had disclosed that the share of sales to Chinese nationals grew to 49.4% of international sales last year from about 10% in 2016.
“This may be the trend in the industry because ALI is big enough,” Mr. Raymundo said.
Growing sales to Chinese investors, however, has its challenges.
“Our worry is if we have too many absentee residences you might have what you see in Shanghai and Beijing wherein you have totally sold buildings but no one’s living there,” Mr. Consunji said.
“It’s out of our objective to sell to the end users — preferably the local end user.”