Metro Manila property prices expected to slump

PROPERTY PRICES in areas in Metro Manila that were hardest hit by floods triggered by Tropical Storm Ondoy are likely to fall, as developers and buyers reassess whether those locations are fit for their projects and their homes, respectively.

While analysts could not immediately say how much real estate prices in those areas — portions of Marikina City and Pasig City as well as several municipalities in Rizal province — would suffer, they were unanimous in saying that both buyers and developers would think twice before investing in those locations.

In a phone interview yesterday, Ramon Jose E. Aguirre, research manager at Colliers International, said people would likely prefer areas that are on higher ground after seeing what the rains did to those locations. "It would have negative impact not just on prices, but also the preference of peopleIt’s still vague how big the effect would be, but it’s obvious that the values of properties there are in danger [of dropping]...The new developments there could become hard sells."

Prince Christian R. Cruz, senior economist of online research house Global Property Guide, agreed that prices in those areas would suffer, but said it was still too early to say by how much.

Claro Cordero of Jones Lang La Salle, for his part, said property prices in Cainta and Marikina, which he placed at between P8,000 to P15,000 per square meter for commercial lots and P2,000 to P5,000 for residential lots, could dip by as much as 15%. "It won’t be immediate. Initially, it should be around 10% to 15% at most. That represents the bargaining power of the owner...He doesn’t have any option but to bring it down."

Mr. Cruz added that developers too could adopt a wait-and-see position, as the government could impose regulations for projects in flood-prone areas. "After the Cherry Hills [disaster in Antipolo] for example, government came out with stricter regulations for building foundation [for projects on sloped areas]...Now, [regulators might demand better] flood control systems," he said.

Mr. Cordero, meanwhile, said that those areas would be off the map for some investors for some time. "We were talking to some investors and, at this point, it was an eye-opener for them...It would eventually go back to normal. But in short term, they would take out Cainta and Marikina from their priorities," he said.

Officials of the Chamber of Real Estate and Builders’ Associations were not immediately available for comment.

Mr. Cruz said the government must also improve infrastructure, since developers’ investments would be for naught if flood waters could damage them as a result of poor drainage and sewerage systems.

Mr. Aguirre said property developments in hard-hit areas could slow as property firms review their options.

Now, they would think twice [before moving into these areas]...depende talaga sa movement ng government in uplifting sewerage and [flood control] infrastructure," he said.

In the immediate term, Mr. Cordero said developers and those looking to buy homes can be expected to shun the flood-prone eastern areas of Metro Manila and prefer the southern areas instead. "If you are looking for hotspots for property development, it’s southern vs eastern Metro Manila...The loss from the east side would benefit developers on the south side south since [projects there were] barely affected," he said.

Mr. Cruz, however, said that given the scarcity of space in Metro Manila, property developers and buyers would eventually come back to the eastern areas. "The problem is if you don’t want to live there, where do you go?" he said, pointing out that aside from Marikina, the other places that were submerged were not flood-prone before.

Architect Felino Palafox, Jr., part of the team that wrote a study back in 1977 that cited the Marikina Valley as one of the areas unsuitable to property development, said the recent calamity should goad the government to undertake better-designed preventive steps.

"It will happen again. This is not the first time and this would not be the last time. Maybe the intensity of rainfall was the first, but the floods happened before," he said. — Don Gil K. Carreon

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