In 2015, the Philippine population stood at 101.0 million with a median age of 24.3, highlighting a young demographic where approximately 20% of the working population form part of the millennial generation (born between 1980 and 2000). In a recent article, Forbes describe millennials to have a deep sense of community building and connected lifestyle with a strong preference for work-life integration that is supported by the flexibility and convenience offered through technology.
This younger working population has led the introduction of new asset classes that cater to their needs. The millennials’ adaptive and community-based lifestyle is manifested through co-working and co-living. Co-working lies in the idea of sharing common work areas with multiple tenants contained in one office facility in a collaborative and open environment. The same concept is fairly adopted in the residential sector by means of co-living, translated through the construction of dormitels – a dorm establishment for professionals.
Dormitel is a combination of a dorm and hotel services where young professionals are the typical tenants. In the Asia Pacific region, JLL defines co-living as a form of housing where residents with similar interests and values share living space. Affordability, location, convenience, and safety are some key considerations occupiers seek when they move to dormitels.
As of date, majority of existing dormitel stock can be found in the fringe areas of Bonifacio Global City (BGC) and Makati CBD, offering room accommodation to employees of companies located in the CBDs.
Below is a list of select existing developments:
Source: JLL Philippines Research and Consultancy; various dormitel operators
Note: Bonifacio Point has 69 micro studio units
The typical demand drivers for dormitels are employees from the offshoring and outsourcing (O&O) industry as well as firms who form partnerships with dormitel operators for corporate staff housing. Apart from business to business transactions, dormitel operators offer units to individuals too. Currently, existing dormitels record a robust occupancy rate close to 100%.
The rise in the demand for dormitels has drawn interest from big developers with some already staging their entry into the market. In 2017, SM Investments Corp. bought 61.2% shares of Philippines Urban Living Solutions Inc,’s MyTown brand. Meanwhile, ALI recently opened its first dormitel facility – The Flats Amorsolo in Makati CBD and will be opening its second facility in BGC early 2019.
Similarly, real estate investors are keen in this emerging property investment as it brings in stable recurring income, supported by lower land value for acquisition in the fringe areas, low construction cost, and low operational cost, among others.
Overall, the demographic shift to a younger working population in the Philippines, coupled with the community based lifestyle of millennials, and the need for affordable residential options has prompted opportunities for an alternative asset class for real estate investment. Young professionals are observed to penetrate a new segment with property investors capturing the underserved market and expand their business. Lastly, the continued expansion of O&O firms and MNCs is likely to fuel the demand for dormitels as it provides affordable yet convenient housing options right in the heart of Metro Manila.
More on 'Residential' in 'Philippines'
- Philippine real estate amid economic uncertaintiesMarch 31, 2023
- Key drivers to carry Philippines real estate amid headwindsJanuary 6, 2023
- A closer look into real estate sustainability in the PhilippinesNovember 12, 2021
- What the Philippines can learn from India’s REITJune 19, 2019
- Bay City, Philippines: business beyond leisureJuly 26, 2018
