APPD Market Report Article

Manila

February 28, 2022

-1.6%

PHP 819

Rents
Falling

Easing restrictions and higher RTO figures supported lease demand

  • Improved lease demand from local professionals in key business districts of Makati City and Taguig City was observed during the quarter. This may be attributed to higher RTO on account of the steady decline of COVID-19 cases and easing of restrictions. The softer leasing conditions provided additional incentive for prospective tenants to capitalise on lower rents.
  • The sales market remained challenged evidenced by several units being returned to the market and relatively slow sales. Nonetheless, enquiries remained high owing to favourable payment and loan terms.

No new completed residential condominium recorded in 4Q21

  • No additional stock was completed in 4Q21. Around 3,900 units is expected to go live in 2022 with majority targeting to be completed in 1Q22. This supply peak is expected to exert pressure on vacancy and sales take-up.
  • Vacancy rate improved to 9.9%, down by 69 bps as local professionals lock in leases under favourable terms.

Rents and capital values decline marginally in 4Q21

  • Residential rents settled at PHP 819 per sqm per month, compressing by 1.1% q-o-q. Sustained subdued leasing conditions prompted some unit owners to lower their rents in effort to fill vacant units that have been on the market for an extended period of time.
  • Residential capital values contracted by 0.1% q-o-q, registering at PHP 269,500 per sqm in 4Q21, on the back of sluggish sale demand. Local high-net worth individuals continue to be the main demand driver as they take advantage of flexible payment terms.

Outlook: Lease and sale markets to grow in line with the office sector

  • Lease demand in the next six months may likely remain subdued owing to projected lingering of COVID-19 which may see employees and employers continue their WFH or remote work arrangements. Rentals may grow marginally in tandem with projected gradual uptick in lease demand as the landscape stabilises.
  • Sales activity may improve during the latter part of the year on the back of renewed investor sentiment underpinned by projected improved economic performance and reopening of markets. Likewise, prices may experience an incremental uptick with sales demand picking up.

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

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