Buoyed by moneyed expatriates and investors, Metropolitan Manila (or simply, Manila) is the world’s hottest luxury home market, or the market where luxury home prices appreciated the most in 2018.
The Knight Frank Prime International Residential Index (PIRI 100) from property consultancy Knight Frank said Manila edged out familiar luxury cities such as Tokyo, Paris and Boston for the rating. PIRI 100’s ranking of 100 luxury home cities is based only on how much luxury home prices increased last year. Luxury property is often defined as the top 5 percent of each market by value.
Luxury prices in Manila soared 11 percent in 2018. Knight Frank said Manila’s luxury home market was being propelled by Manila’s robust economy, the increased appetite for luxury homes by wealthy foreigners and expatriates and a shortage of luxury homes.
Knight Frank said the Philippines’ annual GDP of 6 percent last year was one of the factors that “motivated some expatriates to grab a slice of real estate back home.” Manila accounts for over a third of the country’s GDP.
Knight Frank noted that while Manila’s 11 percent 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.”
The Philippines and Singapore were the only Asian cities in PIRI’s top 10 list. Edinburgh (up 10.6 percent) took the second spot, followed by Berlin (10.5 percent) and Munich and Buenos Aires were tied at fourth (10 percent). Boston (up 8.6 percent) and San Francisco (7.8 percent) took the eighth and tenth spots.
Tokyo took 11th. Paris was 19th (up 5.3 percent), London, 91st (down 4.4 percent). Beijing was tied for 25th place (up 4 percent). Hong Kong took 47th place (up 1.8 percent).
Within Asia-Pacific, a slowdown from a 4.9 percent average growth rate in 2017 to 2.7 percent in 2018 illustrates this trend, according to Nicholas Holt, Knight Frank Asia-Pacific head of research.
There are currently only four luxury residential projects in the pre-selling stage in Manila. Target completions are within the next five years.
“Of the 700 units of luxury residential apartments floated, 93 percent have already been absorbed as of 2018,” Jan Paul Custodio, senior director for research and consultancy at Santos Knight Frank, told South China Morning Post.
“Post-selling luxury projects, on the other hand, are 95 percent sold, with less than 15 units available,” he added.
In 2018, Manila’s luxury homes market drew $125.1 million in investments, down 35 percent from $192 million in 2017. The drop was mainly the result of limited remaining market inventory.
The 100 luxury residential markets tracked by PIRI 100 rose 1.3 percent on average in 2018. This percentage compares to 2.1 percent in 2017 and is the index’s lowest rate of annual growth since 2012.