A rebound in rents and residential prices in Makati City is seen by the third quarter of 2022. — REUTERS

RENTS and residential prices in the Philippines are expected to start recovering by 2021, except in Makati City which may continue to see a decline for a longer period, a recent survey of real estate agents found.

In a Property Survey and Index Q4 2020 report, published by real estate technology group Juwai IQI on Thursday, 192 real estate agents in the Philippines were surveyed and found to anticipate a bounce back in the industry by next year.

On a nationwide basis, residential prices are expected to grow 2.3% by the third quarter of 2021, and by 16.9% by the third quarter of 2022.

Foreign buyers to contribute the most to the Philippine property sector’s future transactions growth — survey

However, Makati City will continue seeing a 2.3% decline in residential prices over the same period next year, and will only record a growth of 14.8% by the third quarter of 2022.

“After Makati City CBD (central business district) residential prices rose nearly 132% in the nine years to 2018, the capital city market is now weaker than much of the rest of the nation. The industry expects this weakness to continue, with Makati City prices and rents trailing the national trend over the next two years,” Juwai IQI said.

The national residential rent rate is expected to improve by 1.9% in the third quarter of 2021, and by 13.2% in the third quarter of 2022. However, Makati City is seen to post a decline of 6.6% next year, before growing 12.3% in 2022.

“Several factors are probably at play with the lower price expectations in the capital city. COVID (coronavirus disease 2019) has cut foreign buying, the majority of which is focused on the capital city. Also, the price lag is a continuation of the trends from earlier in the year,” Juwai IQI Group Co-Founder and Executive Chairman Georg Chmiel said in an e-mail to BusinessWorld.

“(Makati City) has had a tremendous run-up in prices in recent years, and is now taking a breather. Potential buyers aren’t sure if they can still expect the rapid price gains of recent past, so many more are willing to sit on the fence until they have a better expectation for gains or can get a better bargain,” he added.

Meanwhile, the improvements in rents and residential prices in the rest of the country will depend on “a return to near normalcy,” Mr. Chmiel said. “Economic growth, employment, construction, and foreign travel will all bounce back and drive new buyer interest.”

The survey also found that most real estate agents expect foreign investors to be the primary source of buyers next year. They also expect to see demand from local investors, local buyers that are upgrading their properties, and first-time local buyers.

Among the foreign buyers, most are expected to come from Mainland China, followed by Hong Kong, Taiwan, America and Singapore.

“The industry believes that foreign buyer demand remains relatively robust. Approximately half of all agents in the survey report that mainland Chinese are likely to complete more transactions in the fourth quarter than earlier in the year — both nationally and in Makati City,” it said.

Most of these transactions will be driven by offshore gaming companies, while others by retirement-driven motivations.

The strong demand for residential properties in Makati City, the Bay Area, Ortigas, and Quezon City last year was attributed to the influx of Chinese nationals employed by Philippine Offshore Gaming Operators (POGOs).

However, more POGOs are exiting the country due to the pandemic, slowing demand and the Chinese government’s crackdown against offshore gambling. — Denise A. Valdez