According to property consultancy Knight Frank, Manila is the hottest luxury home market in the world — besting other popular luxury housing cities around the globe such as Boston, Tokyo and Paris.
Manila’s robust economy, shortage of luxury homes and increased demand for them by wealthy foreigners are key to the price increase of 11 percent that the capital city of the Philippines experienced in 2018.
The ranking of 100 cities is based solely on the growth of their luxury home prices last year — with Singapore as the only other Asian city to take a spot in the top 10. Its price increase of 9.1 percent placed 7th in the list.
Boston came in 8th with its 8.6 percent, whereas Tokyo took the 11th spot with its 6.8 percent. Meanwhile, Paris ranked 19th place with its 5.3 percent.
Manila’s annual GDP of 6 percent last year was cited by Knight Frank as one of the factors that “motivated some expatriates to grab a slice of real estate back home.”
The property consultancy, however, noted that Manila’s percentage rise was still considerably lower than previous top-performing markets — which grew by at least 21 percent — despite topping the list. This can be attributed to the end of the ultra-low interest rates era that began boosting real estate markets globally in 2008.
“While Manila’s 11 per cent growth is far from the norm for the city, it confirms the theory that outliers are disappearing, and we are moving to a period of slower price growth. Within Asia-Pacific, a slowdown from a 4.9 per cent average growth rate in 2017 to 2.7 per cent in 2018 illustrates this trend,” Nicholas Holt, Knight Frank Asia-Pacific head of research, said.
Building more affordable homes had been the Philippine developers’ focus, as the demand for them was larger.
“There are only four luxury residential projects in the pre-selling stage. Target completions are within the next five years,” said Jan Paul Custodio, senior director for research and consultancy at Santos Knight Frank.
“Of the 700 units of luxury residential apartments floated, 93 per cent have already been absorbed as of 2018. Post-selling luxury projects, on the other hand, are 95 per cent sold, with less than 15 units available,” he added.
He also said that Manila’s luxury homes market decline in 2018 was mainly attributed to the limited remaining inventory in the market. It drew 6.5 billion pesos (US$125.1 million) in investments versus the 10 billion pesos it garnered in 2017.
The Estate Makati, a joint project of firms owned by the Philippines’ two wealthiest families, with 180 prime residential units broke ground in late January, however — adding supply to the market. It is expected to command higher prices.
“The price increase was largest in Makati, where less than 1 percent of floated inventory remains unsold,” Custodio said.
He added that the demand is mainly coming from expatriates and high net worth locals.