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High rates seen dulling residential market as investors favor office, industrial property

HIGH RATES are taking the shine off the residential market, with property investors expected to lean more towards office, industrial, and logistics projects, Colliers Philippines said.

Paul Chua, director for capital markets and investment services of Colliers Philippines, said that although the residential sector has seen a recovery in the high-rise condominium segment in Metro Manila, rate pressures, which affect the affordability of mortgages, are expected to continue affecting the market next year.

“We saw the uptick in horizontal developments outside of the major business districts, where prices remain competitive in all market segments… we see this continuing in 2023,” Mr. Chua said.

In its 2023 Global Investor Outlook, Asia-Pacific investors surveyed by Colliers cited interest rates, increased construction costs and higher asset operating costs as the top risks for next year.

According to Colliers, investors see these challenges to have the most negative impact on their ability to execute their investment strategies next year.

At the global level, 88% of the investors cited interest rates as the top risk, followed by inflation and supply chain disruptions at 77% and 68%, respectively.

The report also indicated that Asia-Pacific investors have expressed a preference for office, industrial and logistics, and build-to-rent projects next year.

The Philippine office market take-up rate was up 72% growth in the first nine months, said Colliers.

“This year, (the segment) posted the first positive net take-up of offices which was driven mostly by the information technology-business process outsourcing sector,” Mr. Chua said.

Colliers said that it expects the demand for horizontal residential housing and industrial property in the Philippines to remain solid in 2023.

The 2023 Colliers Global Investor Outlook report, which surveyed over 750 investors worldwide, was conducted in October and November.

It also contains input from 30 Colliers Capital Markets global and regional experts. It is the third edition of Colliers’ annual outlook for global property investors. — Justine Irish D. Tabile