‘High-end and luxury developments soar’, here’s KMC Savills’s 2024 real estate industry report

Despite the competitive office landscape, Makati’s new buildings are leading the charge with occupancies that Curran pointed to as a recent resurgence in the business district’s appeal for its distinctive affinity in culture and dining.

Meanwhile, Iloilo lease rates have increased through the pandemic due to the constant demand from the IT and BPO/BPM sectors. KMC Savills sees this as an effect of the continuing expansion outside Metro Manila where there is deemed to be a larger talent pool and relatively lower wages. Following Iloilo are Cebu, Clark, Davao, and Bacolod.

One of the most notable demands by clients for office spaces is LEED certification, KMC Savills reported. With this, wouldn’t it be best for developers to continue pushing for sustainable measures in their architecture and bucolic philosophy in design?

The eye for detail and compliance with global standards are also some of the things Carbonell advises for developers building warehouses to address the concerning issue of elevated vacancies in the said sector. Based on KMC Savills’s report, Carbonell is wary of the mismatch between the demand and supply in the industrial market.

“Manufacturing and logistics are paving the way for industrial hubs,” Carbonell shared in her report, with Laguna as the primary location for over half of the warehouse stock. KMC Savills also reported a significant decrease in Bulacan and Pampanga’s rental rates, which may seem attractive to many companies in the manufacturing and logistics sectors but not to some whose products and services require optimum quality.

In the residential sector, De Las Alas discussed the shift in how middle-market consumers are now leaning more towards PAG-IBIG to finance their dream homes outside of Metro Manila. On top of rising interest rates, the need to live near the place of work has declined, thanks to some companies who wish to continue hybrid and work-from-home setups and the rising number of freelancers. But this is leading to a slowdown in mid-market condominium sales. On the other hand, developers are now focusing more on high-end and luxury developments, which make up 60 per cent of the new launches for the past two years. Notably, the Metro Manila market has only sold 65 per cent of the 113,000 units floated, for pre-selling and ready-for-occupancy units. Around 40,000 units are still left unsold, half of which are from mid-market developments. KMC Savills is wary of this potential saturation of the mid-end residential market.

De Las Alas advises developers to build less dense communities and provide high-quality facilities and amenities as these would attract potential investors, especially in the high-end market. The affordable segment, meanwhile, also continues to brace resilient demand.

Seeing today’s landscape, KMC Savills notes emerging markets to look out for such as the rise of renewable energy and the data centre industry in the country. Moreover, with the renewed interest in tourism, new hotel and resort developers seem to be on track with their investment.

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