APPD Market Report Article

Manila

November 29, 2022

Janlo de los Reyes, Head of Research, Philippines

-0.7%

PHP 822

Decline
Slowing

Leasing and sales demand sustain upward trajectory

  • Residential leasing demand maintained its momentum, resulting in a net absorption of 804 units in 3Q22. The continued implementation of the return-to-office (RTO) mandate by firms, as well as lenient restrictions on the entry of foreign expatriates drove up demand in the leasing market during the quarter.
  • Demand in the sales market also showed improvement, with sold units outpacing returned units to the inventory during the quarter. Increased RTO rates and stabilisation of the market encouraged buyers to push through with their purchases during the quarter. Some investors took advantage of current rates as prices are anticipated to hike faster in 4Q22.

Vacancy rate contracts further as leasing demand rises

  • No new completion was recorded in 3Q22, and no additional development is expected to come online for 4Q22. However, new supply from recent launches and delayed projects is anticipated to come online in the coming years and bump up supply, which may temper the decrease in vacancy.
  • Vacancy rates have improved, settling at 7.5% after a reduction of 117.4 bps q-o-q. The fall in residential vacancy was supported by continuous acceleration of leasing demand.

Rents and capital values rise as markets show improvement

  • Rents displayed an uptick of 0.7% q-o-q, settling at PHP 822.9 per sqm per month, as healthier leasing demand encouraged unit owners to hike rents.
  • Prices averaged at PHP 276,902 per sqm, a growth of 1.0% q-o-q, supported by the gradual improvement of demand for residential sales.

Outlook: Leasing demand anticipated to increase further by end-2022

  • Healthier vacancy levels are projected by end-2022, on the back of the anticipated uptick in leasing demand, coupled with limited supply coming online. However, a slower improvement in demand is expected, in tandem with the anticipated slowdown of office leasing volumes.
  • Rents and capital values are expected to rise further as the market continues to stabilise. However, an interest rate hike by the Bangko Sentral ng Pilipinas should temper price increases.

Note: Manila Residential refers to the Makati City and Taguig City mid-high and luxury residential market.

Talk to us 
about real estate markets.