"Residential real estate: Two opposite trends."
Two of the principal features of the quarantine regulations that have been in place since March 2020 are the general reduction in mobility and the WFH (work from home) arrangements resorted to by employers.
The two features have affected the residential condominium segment of the real estate development industry differently. The impact of one has been centrifugal in character; the impact of the other has been centripetal.
Residential condominiums are one of the largest segments of the Philippine real estate development industry. For some time it has been the fastest-growing segment in the face of the business-depressing effects of the pandemic. At least one major real estate developer actually recorded an increase in sales in 2020.
The residential condominium market had in fact been rapidly growing prior to the onset of the pandemic. The driving force behind that growth was all too obvious: the horrendous and seemingly irremediable traffic conditions in what has come to be known as National Capital Region (NCR) Plus. The Plus refers to the four provinces adjoining the NCR. Even before the pandemic’s lockdown, Filipinos who work and live in NCR Plus had long been feeling locked down by the traffic conditions, especially along EDSA. Two to three hours of travel to enter and exit the nation’s premier metropolis had become the norm for FIlipinos who lived and worked in NCR Plus.
Deliverance was badly needed, and the deliveries were the real estate developers. Posing the question “Why spend four or five hours on the road every day when you can own a home within the metropolis?” The developers proceeded to build residential condominium structures in and close to NCR’s center. The attraction toward the intra-metropolis residential condominiums was greater in the case of residential condominiums that were built next to malls. The clear winner in this regard has been the SM Group, which has malls all over the metropolis. The ability to easily access essential goods and services has been an enormous boom to the residents of SM condominiums during the NCR lockdown.
Having experienced the disruption and deprivation that a community quarantine can cause, more and more Filipinos are deciding to opt out of their community woes and buy residential condominium units within the metropolis. Here there is a confluence of needs between the harried residents and workers of NCR Plus, on the one hand, and the real estate development industry on the other. Much the same thing is happening, though more slowly, in the Metro Cebu area.
However, the other quarantine-related phenomenon that I cited at the outset of this column, WFH, is exerting a push in the opposite direction. I characterized it as centrifugal because it is pushing Filipinos residing and working in NCR Plus to not acquire residential-condominium space within the metropolis but, rather, to reside outside NCR Plus and work from home. With WFH, more and more residents and employees are examining the idea of continuing to live in Laguna or Cavita on a WFH basis instead of laying out money for a residential condominium in Quezon City or Makati City. Decisions such as this will have an adverse impact on sales of the developers’ residential condominium projects.
However, real estate developers need not worry, in my view, about the impact of WFH on the residential-condominium element of their long-term plans. On the basis of their experience with the decades-old traffic situation and with the ongoing pandemic, more Filipinos are likely to decide that a residential condominium unit within or close to centers of important human activity represents the most rational home-buying option.