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Real estate is still ‘gold’ in the new normal

Published By: | March 18, 2021 Despite the challenges brought about by the pandemic, real estate still remains a safe and viable investment option.

Latest data from the Bangko Sentral ng Pilipinas showed that nationwide residential property prices rose by 27 percent in the second quarter of 2020, even as the country was at the height of stringent lockdown measures and a pandemic. It was also, reportedly, the highest year-on-year growth to be recorded, since the BSP started its Residential Real Estate Price Index (RREPI) in 2016. In Metro Manila alone, residential property prices grew at an astounding rate of 34.9 percent.

The surprising upturn was primarily driven by higher demand for upscale projects, which even posted price increases in 2020. According to Colliers International Philippines, mid-income, upscale and luxury units covered 80 percent of total take-up in the pre-selling market in the first half, showing the market’s growing appetite for such properties.

Along with the recent opening of the economy and an improvement in market sentiment, the industry is also back on its pre-COVID tempo. In fact, a leading research agency has reported that annual supply for residential properties grew by 17 percent year-on-year, despite challenges to construction activity. The pre-selling market also recorded a significant improvement, as people realized the value of investing in real estate during the pandemic.

More growth opportunities are also expected in the real estate market this year, mainly driven by stable credit ratings, an economy dominated by a young working population, lower interest rates, government infrastructure projects, a six-million-strong housing demand, a steady inflow of overseas workers’ remittances, cash inflow from foreign loans and the promise of mass vaccination before year-end.

Property portal Lamudi also predicts that condos will have the highest growth from the second half of 2020 to the second half of 2021, and interest in residential and commercial properties within CBDs, will likely increase, as well.

‘Gold’ opportunity

One developer, in particular, continued to display strong confidence in the market as it pushed through with its expansion plans in the second half of 2020. SM Development Corp., the wholly-owned residential developer of SM Prime, debuted a number of pioneering projects, the latest of which is Phase 2 of Gold Residences.

Rising within the 11.6-hectare Gold City in Ninoy Aquino Ave., Parañaque City, Gold Residences seamlessly fuses together luxury and utility, elegance and convenience to provide a bespoke lifestyle for the highly discerning, modern-day urban dweller. This residential enclave will be part of a vibrant, fully integrated development that will have residential towers, offices, lush open spaces and commercial hubs located within a single, self-contained community.

Just three days following its official launch in November last year, Phase 1 of Gold Residences had nearly sold out, raking in a hefty P17.5 billion in total sales, or 99 percent of the units. Its value has since grown at a compounded annual growth rate of eight percent.

The same is expected for Phase 2 of Gold Residences, which builds on the previous success of Phase 1, thanks to its proximity to NAIA terminals, business districts, commercial and entertainment centers, large scale shopping malls, hotels and other establishments as well as major thoroughfares such as the NAIA Expressway and Skyway, among others.

Such proximity will prove beneficial to future residents, especially since several companies have adopted split operations or staggered schedules, with a portion of their workforce reporting to the office, while others work from home. In fact, the trend itself also helps accelerate movement toward integrated developments located in major central business districts (CBDs).

The luxury property can even double as a source for passive income for buyers who would want to lease out their units, with the help of SMDC’s property management team – making it a sound investment in more ways than one.

True enough, SMDC posted a six-percent revenue increase in 2020, up to P46.5 billion from P43.7 billion in the previous year. Operating income also increased by 16 percent to P19.7 billion from P17 billion. Reservation sales also registered a 10 percent growth, bringing the sales take-up to P99.0 billion in 2020 from P90 billion in the previous year.

SMDC is PropertyGuru’s Best Developer for 2020. For more information on Gold Residences, visit the Gold Residences Property Page.

*Minor edits have been made by the editors.

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