Lease demand sustained with continued hybrid-work arrangements

• Residential lease demand sustained positive absorption at 85 units in Q2 2024, but at a slower rate with respect to previous levels. Demand coming from foreign expatriates and executives continued to drive leasing activity during the quarter.
• Likewise, investment activity in the residential market continued to improve, albeit minimally, with foreign expatriates keeping the luxury segment afloat amid economic pressures during the quarter.

No new supply during the quarter, which lowered vacancy

• No new units were turned over in Q2 2024. However, a majority of the units that are expected to be finished in 2024 will be turned over in the latter part of the year.
• The vacancy rate continued to contract and settled at 7.1%, a 15.52 bps decrease q-o-q. The delayed addition of new supply combined with sustained lease demand supported the decline in vacancy levels.

Rents and capital values improve slightly

• Rents expanded to PHP 841.8 per sqm, per month, a 1.2% increase q-o-q. Increased demand amid the economic headwinds encouraged select unit owners to increase their rents.
• Similarly, capital values continued expanding, but at a slower pace, and reached PHP 295,923 per sqm, a 0.3% increase q-o-q. The sluggish demand, along with the challenging economy, slowed the growth rate of capital values.

Outlook: Rents and prices to maintain a slow yet positive trajectory until year-end

• Most of the new supply should go online by year-end. This may increase vacancy in the near term, despite the improving RTO rates. On the other hand, the sales market may continue to improve, driven by the recovery of the economy.
• Rents are expected to rise in the coming quarters due to improved leasing demand. Capital values may also rise as new prime assets arrive by year-end. However, growth may not be significant in either area due to ongoing economic headwinds.