The Metro Manila market for luxury residential real estate remains resilient in the face of rising interest rates. By year end, new luxury condos will account for approximately 30% of total condominium sales.

Our conversations with buyers indicate no loss of demand. Luxury buyers are liquid. Many buyers are choosing to allocate capital to real estate rather than stocks. They consider real estate to be a superior inflation hedge because it can gain value over time in line with changes in the consumer price index.

In fact, the luxury market is so strong that it has buoyed our fortunes. IQI Caliver recorded 23% year-on-year transaction growth to achieve over P1.1 billion in residential secondary sales transactions.

Demand for luxury residential property is supported by consumer and business sentiment, which has steadily improved in 2022.

Bangko Sentral ng Pilipinas’ Consumer Expectation Index reveals the consumer outlook index for the next 12 months is 33.4%, up from 18.6% a year earlier.

The central bank’s statistics also reveal some signs of weakness. Nonetheless, high income consumers remain substantially more positive about the economic outlook and their personal financial circumstances than their lower income compatriots.

This may explain why the percentage of households that plan to buy real property within the next 12 months increased slightly in the third quarter. It climbed from 5.6% to 6.1% in the Q2 2022 survey results. 

Four macro trends will support the luxury residential market in 2023.

1. Economic growth. The Philippines is one of the fastest-growing economies in Asia, with GDP growth projected to reach 6.5% in 2022 and a forecasted 6.3% in 2023.
2. Population growth. Manila is one of the fastest-growing cities in Asia, with a population that is expected to reach 20 million by 2030. This growing population is fuelling demand for housing, including luxury properties.
3. Improved infrastructure. The Philippine government is investing heavily in infrastructure projects, such as the expansion of the Manila International Airport and the construction of a new subway system. These improvements are making Manila an increasingly attractive place to live and work, creating new value drivers in the property market, and driving up demand for luxury properties.
4. Robust tourism industry. Manila is a popular tourist destination, with international visitors spending an estimated $5.5 billion per year before the pandemic. The sector expects to reach pre-pandemic levels by 2024, despite near-term challenges such as high inflation. 

Wealthy buyers are turning to real estate in this period of high inflation. Demand is further supported by economic factors that promise price growth in 2023.

By Emanuel Andrew Venturina, Managing Director of IQI Caliver.