Estate Makati, Ayala Avenue’s Final Frontier
Along Ayala Avenue’s prestigious Apartment Ridge — at the heart of Makati’s Central Business District (CBD), an ultra luxury condominium building is set to rise head and shoulders above the rest of its peers — both literally and figuratively. Well, at least that is the ultimate plan and goal of Henry Sy Jr. (the chairman of SM Development Corporation, SMDC) and Alfred Ty (the chairman of Federal Land Inc., FDI) as they embark on a joint venture to construct The Estate Makati.
The Estate Makati is a proposed 3,200 square meter (sq. m) state of the art ultra luxury condominium project, built on top of the last remaining empty parcel of land along Ayala Avenue — owned jointly by SMDC and Federal Land Inc.. The construction broke ground in January of this year (SEE: The Estate Makati breaks ground, The Philippine Daily Inquirer) and is slated to be finished by the first half of 2023. Upon its completion, The Estate will be a sight to behold along the Makati skyline — standing tall at 270 meters. For comparison, the Philippine Bank Communication (PBCOM) Tower — the tallest tower along Ayala Avenue and the third tallest in Metro Manila — stands at a height of 259 meters. Only the Grand Hyatt Manila and Trump Tower Manila, which stand at 318 meters and 280 meters respectively, will be taller than The Estate Makati.
Despite being at least five years away from its targeted completion date, the demand for the property has already been strong. In fact, the pre-selling prices of the project’s 188 units have already reached astronomically high levels of PHP550,000 per square meter (SEE: Manila’s most expensive condo costs P550,000 per square meter, Business World). At these current price levels, The Estate Makati is already the most expensive condominium in Metro Manila, even if it is still in its construction phase.
Moving forward, the value of each unit in The Estate Makati is expected to rise even further in the coming years — making it an attractive investment opportunity for real estate investors. The most obvious reason for this expected price increase is the fact that the project is still in its pre-selling phase. On average, the pre-selling price of a condominium unit is 30% cheaper than a unit which is ready for occupancy (RFO). In addition to this phenomenon, (1) the unique design and architecture, (2) the robust demand for real estate assets, and (3) the limited supply of available property in Metro Manila ensure that possible investors will enjoy high returns on their potential investment on The Estate Makati.
Unique Design and Architecture of The Estate Makati
The Estate Makati is designed by the award winning European architecture firm, Foster + Partners. Foster +, which was established in 1967 in the United Kingdom (UK), prides itself with its holistic design philosophy — focusing on innovation, sustainability, and design. Through the firm’s impressive body of work, Foster + has thrice been awarded the Royal Institute of British Architects Stirling Prize in 1998, 2004, and — most recently, 2018.
Foster + Partners plans to bring this same level of innovation and exellence to their first ever project in the country. One of their unique ideas is to install angled windows, which will ensure that the building’s residents will have an unobstructed view of the beautiful Makati City skyline and will have ample natural light without bringing in too much heat into the unit. The most important feature, however, is the column-free units of the building. The Estate Makati will be the first and only condominium building in the Philippines wherein the units are completely open. This unique feature gives the owners the complete freedom to design and customize their units. From the perspective of an investor, this is an invaluable feature which would make it much easier to resell the unit to buyers who make up the robust real estate market.
Robust Demand for Real Estate Assets
The robust real estate demand is mainly driven by three key factors: (a) The rising levels of disposable income, (b) A recent influx of Chinese investors, and (c) The expansionary monetary policy of the Bangko Sentral ng Pilipinas (BSP).
Rising Levels of Disposable Income
The first key factor is the rapidly growing Philippine economy. In fact, industry experts forecast the Philippine economy to double to $660 million by 2026 (SEE: GDP seen doubling by 2026 as Philippines “set for dynamic growth”, The Philippine Star) and even reach $1 trillion by 2032 (SEE: IHS Markit: Philippines to be a trillion dollar economy by 2032, The Philippine Daily Inquirer). This rapid economic growth should translate to higher levels of disposable income and purchasing power for Filipinos.
Recent Influx of Chinese Investors
The demand from locals is not the only reason for the robust real estate demand in the country. In fact, a bulk of the recent demand for property has actually been driven by the recent influx of the mainland Chinese tourists and investors into the Philippines. This phenomenon has mainly been due to President Duterte’s recent pivot towards China — allowing him to bag billions of dollars worth of investments from China (SEE: PHL bags $12B in investments from Duterte’s fourth visit to China, GMA News). As these foreign direct investments materialize in the future, the influx of foreigners into the country should continue.
Expansionary Policy of the BSP
Finally, the expansionary stance regarding monetary policy adopted by the Bangko Sentral supports the increased real estate demand. In the past few weeks, the BSP has slashed its key policy rates (SEE: BSP cuts key rates; more to come in the near future, PropertyAccess). These moves have injected much needed liquidity into the market — making it easier for real estate investors to acquire financing for their purchases.
The combination of these factors have contributed to the strong demand across the industry.
Limited Supply of Available Property in Metro Manila
Despite the increase in demand for land, the supply, obviously, remains the same. There simply is not enough land to satisfy the ever growing demand for property in Metro Manila. The Estate Makati, which is actually built on the last available plot of land along Ayala Avenue, is a prime example of this scarcity of land.
Taking into account both the robust demand along with the extremely scarce supply, there is only one way to balance the market: An increase in property and rental prices. For investors who already own existing property, this is great news. For other investors looking to get in on the action — however, The Estate Makati might be their best and probably last chance.
Photo from estatemakati.com