Lamudi Outlook Quarterly 2Q2022

3Q2022 in Numbers

The third quarter of 2022 was marked by an uptick in consumer activities as face-to-face classes reopened, mask-wearing guidelines loosened, and leisure activities resumed. However, a continuous rise in interest rates and building costs may breed caution among investors considering potential delays in project developments and impacts on mortgage rates.

Lamudi looks into property search and demographic activity in the third quarter of 2022 to identify new trends in the online buying, selling and renting market

Lead Growth by Property Type

Leads for lots in Visayas

and Mindanao increased by 22% and 10% respectively.

Source: Lamudi com ph

Lead Growth by Price Range

The economic segment had the highest growth in demand out of all other price segments in 3Q2022 Properties priced below Php 450K sustained the most significant increase in demand out of all other price segments for properties for sale as leads increased by 12%

Rental properties priced Php 200K - 500K continued to attract leads over the last year and quarter. This may have been influenced by growth in the commercial sector as firms consider alternate offices amid changes in work arrangements and office space requirements.

Property Supply by Price Range

Rental supply continued to increase across most price segments There were fewer listings priced below Php 5K uploaded in 3Q2022, though listings in this price range represent a smaller share of supply composed of shortterm rental units.

Most Searched Locations by Island Group

Property seekers showed strong demand for regional administrative centers, with Quezon City, Baguio, Cebu City, and Davao City being the most searched locations in each of their respective island groups.

Amenities

Ventilation and cooling amenities such as air conditioning and balcony were among the top ten most selected amenities on Lamudi in 3Q2022. With average humidity levels peaking in September, cooling amenities contributed to 19% of all amenity searches.

Source: Lamudi com ph

Air conditioning was the most searched amenity.

Quarterly Real Estate News Round-up

Stay up to date on new normal developments, affordable housing, infrastructure, local development, industries, and climate-related news that happened this quarter.

RETURN TO NORMAL

Resumption of Face-to-Face Classes Pushes PH Economy into Full Recovery

On August 22, 2022, face-to-face classes (F2F) in the Philippines finally resumed, contributing to the revival of the economy Most public schools were mandated to have five-day in-person classes, and those with blended learning programs will have F2F classes three times a week The government sees the school reopening as a win for Filipinos, considering that school zones also serve as economic hubs

Revenge Travel Fuels Recovery of Hospitality Real Estate

Hotel occupancy in Metro Manila improved and reached 47 percent in the first half of 2022 The positive development is attributed to the resumption of business travel, a huge volume of foreign arrivals, and local travelers’ readiness to spend Tourism-related trends also influence home preferences, with quiet places of residence transitioning to personal vacation destinations.

The Outlook Awards 2022 Gives Tribute to Pandemic-driven Initiatives of the Real Estate Industry

The real estate industry faced various challenges and trials because of the Covid-19 crisis Faced with different ordeals, developers bounced back stronger and better for the future of the industry. The Outlook 2022: Philippine Real Estate Awards featured pandemic-related citations to recognize developers who excelled in catering to the needs of sellers, property seekers, and organization

Retail Sector Vacancy Approaches Pre-COVID Levels

Pent up consumer demand, relaxed mobility restrictions, and return-to-office initiatives have spurred activity in the retail real estate industry, according to advisory firm Santos Knight Frank. Vacancy rates were at 4 6% as of 2Q2022nearing the pre-pandemic level of 3.6% according to Santos Knight Frank Investment & Capital Markets director Kash B Salvador in an article by BusinessWorld.

AFFORDABLE HOUSING SECTOR

One of the event’s keynote speakers and the National President of the Organization of Socialized and Economic Housing Developers of the Philippines, Inc. (OSHDP), Gino Olivares, cited co-buying and micro-apartments as trends that could mitigate the production backlog. The wholeday conference also tackled the viability of modular construction in balancing the affordability and

quality of houses

PIDS Recommends Tax Measures to Curb

Land Price Increases

The latest study from the Philippine Institute for Development Studies (PIDS) outlined different policy recommendations to make housing more affordable and accessible The research agency said that an equitable property valuation system and the idle land tax collection program can help curb land price increases and contribute to solving the affordable housing crisis.

SHDA Appeals for a Price Cap Hike on Socialized Housing

With the increase in price ceiling for economic housing, the Subdivision and Housing Developers Association (SHDA) hopes that the government will likewise apply changes to socialized housing prices. The group said that the rise in construction costs should be a consideration in the price cap increase. The increase in economic housing price ceiling was introduced in June before the new administration stepped in. From Php 1.7 million, it’s now at Php 2.5 million

The Outlook Conference Underscores the Need for Better, More Affordable Housing

The affordable housing problem and potential solutions gained a spotlight in Lamudi’s The Outlook 2022: Philippine Real Estate Conference

DHSUD to Address Housing Backlog with In-City Housing

The Department of Human Settlements and Urban Development (DHSUD) announced that it would develop in-city housing projects to fill the country's housing gap. Roughly half of the country's backlog is attributed to informal settler families, whose livelihood concerns the projects aim to address. DHSUD aims to provide settlements near their workplaces

INFRASTRUCTURE

DPWH Unveils PPP Priority Projects

The Department of Public Works and Highways (DPWH) identified priority projects under publicprivate partnerships. The majority of the developments are expressways, including Metro Cebu Expressway and Central Luzon Link Expressway All in all, 10 projects were unveiled

BOT Law IRR Amendments to Lure Private Sector

According to the National Economic and Development Authority (NEDA), updates in the Build Operate Transfer (BOT) Law’s Implementing Rules and Regulations (IRR) would encourage more private sector participation in public infrastructure projects One notable change is the definition of the Material Adverse Government Action (MAGA), which terminates the contract and pays the private proponent should government actions discriminate against the proponent and negatively affect their ability to do the project This previously covered only the executive branch, but now includes the legislative and judicial branches as well as local government units (LGUs) and line agencies.

INDUSTRY DEVELOPMENTS

San Miguel Wins Original Proponent Status of Cavite-Batangas Expressway Project

The Provincial Government of Cavite accepted San Miguel Corporation's unsolicited proposal to develop, design, finance, construct and maintain the Cavite-Batangas Expressway. The toll road will span 27 kilometers, starting in Silang, Cavite and ending in Nasugbu, Batangas.

National Infrastructure Program Bill Filed at Senate

Last July 2022, a bill proposing a thirty year planning horizon and establishment of a National Infrastructure Program was filed at the Senate. The bill is centered on the identification process for government core infrastructure projects. Passage of the law would require the government to complete identified projects in the pipeline

DENR Launches Cold Chain Innovation Hub in Taguig

The Department of Environment and Natural Resources (DENR) opened the Cold Chain Innovation Hub (CCIH), a cold chain technology transfer center, at the Technical Education and Skills Development Authority (TESDA) Complex in Taguig City last September. The hub is a one-stop shop center for innovation and capacity-building aimed at promoting the use of low-carbon, energy efficient refrigeration technology in the food cold chain industry

DTI to Open AI Research Center

Last September, the Department of Trade and Industry (DTI) signed a partnership with UnionBank of the Philippines and Global Learning Solutions for the establishment of the Center for Artificial Intelligence Research (CAIR) and Industry 4.0 Pilot Factory (I4PF) The latter will be a hub for collaborative AI research and development, while I4PF will host learning laboratories for technologies such as robotics and intelligent manufacturing The project aligns with DTI objectives to promote digital transformation, enhance productivity, and upskill workers

BSP Introduces Cashless Payment Initiative

Paleng-QR Ph

The Bangko Sentral ng Pilipinas launched PalengQR Ph in Baguio, a program that aims to popularize digital payments Market vendors and tricycle drivers are said to benefit from the initiative, as it can provide access to different financial services The program is implemented in partnership with the Department of Interior and Local Government (DILG)

DA, JICA to Implement Vegetable Value Chain Project

The Department of Agriculture (DA) and the Japan International Cooperation Agency (JICA) are partnering for the Market-Driven Enhancement of Vegetable Value Chain (MV2C), a technical cooperation project with goals to achieve higher yield and income for farmers and achieve food security. The five-year project includes the development of innovative solutions to promote efficiency in the value chain and a value chain roadmap

CLIMATE & SUSTAINABILITY

Climate Emergency Declared in Makati

Makati has declared climate emergency and appealed to businesses, communities, and stakeholders to join the movement in combatting climate change The local government bared its green initiatives, which involve a green, smart transportation system In 2024, the city will deploy around 30 to 50 electric buses in the city

RE Firm Altenergy to File IPO

Renewable energy (RE) firm Altenergy announced plans to raise a PHP 2 18 billion initial public offering in November. The firm aims to develop up to 1,254 megawatts of additional RE projects in the next five years Altenergy was founded by former Department of Energy Chief Vicente Perez Jr., and was involved in projects such as the Bangui Bay Wind Farm, Pililla Wind Farm and Tanay Wind Power Project

PH, France to Increase Agri, Climate Change Cooperation

The Philippines and France expressed interest in expanding development cooperation in areas such as agriculture and climate change during a meeting between Finance Secretary Benjamin Diokno and French Ambassador to the Philippines Michèle Boccoz last August Avenues for partnership discussed include biodiversity, green energy, waste management, and French private sector investment through PPPs

NEDA Develops Sustainability Action Plan

NEDA plans to launch the Philippine Action Plan for Sustainable Consumption and Production The action plan involves impact measurement and evaluation of all sectors as well as a policy agenda promoting responsible consumption and production patterns, and alignment with related measures pushed

This section focuses on economic indicators influencing the affordable housing market.

In 2021, the House of Representatives declared a national housing crisis Rapid population growth and increased internal migration set amid rising costs of land had continued to drive a growth in informal settler families (ISFs) With an estimated six million housing units needed this year and private and public construction output over the preceding five years at under eight hundred thousand units, the already large housing gap continues to widen In this section, Lamudi looks at economic indicators that have driven market movements and delays for properties priced below Php 3M

ECONOMIC SECTOR DEMAND PERSISTS

Property inquiries on Lamudi are concentrated in the economic sector

In 3Q2022, two out of every five leads were for Lamudi listings priced below Php 3M Properties priced between Php 1 5M and Php 3M alone attracted nearly a fifth of all leads on the platform. Properties priced below Php 3M represented the smallest share of listings on the website leaving opportunity to fill supply in the more affordable segments

HIGHER CONSTRUCTION COSTS

One deterrent from producing more affordable housing options is the increasing cost to build. The cost of construction materials in the wholesale market increased consistently from August 2021 to August 2022, according to the Philippine Statistics Authority Prices in August were 7% higher than the previous year, and 33% higher than costs in the base year of 2012

Other than the growing costs of construction materials, the cost of transporting them has also grown more expensive. Travel restrictions during the pandemic had slowed down the movement of construction commodities and caused delays in project development over the last three years. In 2022, the weakening of the Philippine peso against the US dollar as well as higher oil & gas prices have made the purchase, importation and delivery of construction materials significantly more expensive. Boutique developers and those without in-house construction teams may have to transfer the cost burden to the customer or downsize operations in order to carry out the project

RISING RESIDENTIAL REAL ESTATE PRICES

With limited buildable land available, land values have skyrocketed in urban centers. This makes it less cost-effective for real estate developers operating at the heart of business districts to offset capital expenditures and cater to more affordable housing markets

Market values have also risen. Residential real estate prices continued to increase in 2022, with price indices for the first and second quarters of the year being much higher than the average price indices from years 2018 to 2020 Residential real estate prices in 2Q2022 were 42% higher than in the base year of 2014 and 12% higher than the pre-pandemic (2019) average. Prices in residential properties for sale continue to grow more costly

Facilitating access between Southern Luzon and Metro Manila, CALABARZON is a strategic location for industrial real estate investors as well as a prime residential real estate destination for suburban developments. In this section, Lamudi provides supply and demand trends for listings in Region IV-A, composed of Cavite, Laguna, Batangas, Rizal and Quezon (CALABARZON).

With over sixty industrial estates and economic zones (ecozones), CALABARZON is one of the country's prime industrial hubs Its vast lands for agribusiness as well as access to major thoroughfares in Southern Luzon and Metro Manila make the region a key location in both regional and international supply chains The region hosts a strong market for storages given the many factories and processing facilities in the area. Over half of all leads for commercial rentals in the region on Lamudi in 3Q2022 were for warehouses

Commercial properties contribute the most rental supply out of all other properties for lease in the region.

Leads for properties are spread across each province, but Antipolo attracted the largest share of leads in 3Q2022

Source: Lamudi com ph

Top Overseas Sources of CALABARZON Leads

The leisure town of Tagaytay represented roughly 20% of all leads for properties in Cavite, a fifth of which is for properties for sale priced between Php 6M and Php 9M Rentals in Cavite were mostly composed of houses and commercial listings, with house & lot listings, townhouses and warehouses attracting the most leads. Silang boasted the largest rental supply in the province on Lamudi in 3Q2022

The bulk of leads for properties in Cavite were from seekers in Cavite and southern parts of Metro Manila. In terms of demand, Tagaytay and Bacoor attracted the most leads.

Industrial hubs Sta. Rosa and Calamba attracted majority of leads in Laguna.

Laguna's industrial parks, access to schools, and growing residential real estate market make it an extremely attractive location for those looking to live in suburban residential communities. Seekers from Metro Manila and other parts of CALABARZON contributed significant shares of leads to properties in Laguna Transport services such as point-to-point bus routes allow Calamba and Sta Rosa residents direct access to Metro Manila, and vice versa

Lipa attracted nearly a third of all leads for properties in Batangas. Majority of leads came from CALABA and Metro Manila.

There were significant concentrations of leads in the primarily urban areas of Batangas, such as Lipa and Batangas City Batangas is one of the country's most rapidly urbanizing provinces, with major shopping centers, schools, leisure estates and an emerging business process outsourcing (BPO) industry.

THE OUTLOOK QUARTERLY: A WRAP-UP OF THE PHILIPPINE HOUSING MARKET IN 3Q2022 | 17

Demand for properties in Rizal were most concentrated in Antipolo and Cainta in 3Q2022.

Antipolo and Cainta composed over half of all leads for listings in Rizal. Leads for the two cities were most concentrated in listings priced between Php 1 5M and Php 4 5M, and were mostly for horizontal residential properties. Nearly 70% of inquiries for properties in Antipolo and Cainta were from seekers aged between 25 and 54

Amenity searches for seekers from Antipolo in particular were heavily centered around cars. Terms such as garage, car port, and parking contributed to over 20% of their amenity searches

Leads were spread across different cities in Quezon Province but were most concentrated in Lucena.

While leads were fairly distributed across Quezon Province, the capital city of Lucena held the highest concentration of leads in 3Q2022. Lucena was also the third-highest source of leads for Quezon Province during the third quarter of 2022 The top ten most searched amenities by seekers in Lucena included spaces such as a study room and entertainment room pointing to significant demand from a younger property seeker market in Lucena. While pageviews from Lucena were sourced across different price segments, leads from Lucena-based seekers on Lamudi were split between those aged 18 to 24 and 25 to 34. THE OUTLOOK QUARTERLY: A WRAP-UP OF THE PHILIPPINE HOUSING MARKET IN 3Q2022 | 19

Leads are most concentrated within the low-cost segment, while supply is most concentrated within the luxury segment.

In 3Q2022, roughly two thirds of all leads for properties in CALABARZON were for listings priced below Php 6M. Listings priced between Php 450K and Php 4.5M attracted the highest shares of leads in CALABARZON Listings within this price segment were primarily composed of houses and land for sale The most searched sub-categories for house and land properties within this segment were residential lots, house & lots, townhouses, and agricultural lots in that order.

Supply in the Php 6M and up segment were also mostly composed of houses and land for sale. Leads for horizontal properties within this price range were primarily for house & lots and residential lots followed by agricultural lots, commercial lots and beach lots Investment opportunities for property seekers looking into the commercial and residential-leisure real estate abounds in the region.