Property space offers ‘invigorating’ opportunities 

Metro Manila office lease rates have stabilized post-pandemic to an average of P858 per sqm, down by 6.7 percent from pre-pandemic rates. | PHOTOGRAPH COURTESY OF UNSPLASH/ABBE SUBLETT

Real estate brokerage and consultancy firm KMC Savills said the domestic property market offers a refreshing opportunity for developers, with the regional market catching up with Metro Manila.

KMC Savills’ Research and Consultancy and their newly appointed chief executive officer Joe Curran and chief operating officer Cha Carbonell presented a panoramic look at the state of Philippine real estate as they presented the latest data and outlook on the country’s property market for 2024.

“Upcoming office completions are set to invigorate leasing activities,” shared Curran, as demand is seen to sustain for 2024, while the increase in vacancy rates is expected due to the upcoming multiple office building completion for the year. 

BGC remains the favorable location for prime buildings, leading all submarkets with more than two million in office stock and an incoming office supply of about 182,000 sqm — the highest in all submarkets in Metro Manila for the past year.

However, noteworthy transactions also occurred in the last quarter of 2023, with about 110,000 sqm of space taken. The new buildings in Makati are leading the charge, reaching high occupancy rates despite the competitive office landscape.

Metro Manila office lease rates have stabilized post-pandemic to an average of P858 per sqm, down by 6.7 percent from pre-pandemic rates. Remarkably, Iloilo’s lease rates have increased through the pandemic due to the constant demand from the IT-BPM sector, which is seen to continue its expansion outside Metro Manila, where there is deemed to be a larger talent pool and relatively lower wages. 

In the industrial sector, Cha Carbonell shared that “Manufacturing and logistics are paving the way for industrial hubs,” with manufacturing accounting for nearly half to 41 percent of the current tenant market. Laguna is reported as the primary location for over half of the warehouse stock. Elevated vacancies, however, may pressure warehouse rents. Particularly noteworthy are the significant decreases in the rental rates of Bulacan, which went down by 42 percent and Pampanga by 21 percent.

In the residential sector, KMC Savills Research and Consultancy associate director Joshua De Las Alas discussed the shift in how middle-market consumers are now leaning more towards PAGIBIG to finance their dream homes outside of Metro Manila. On top of rising interest rates, the need to live near the place of work has declined, leading to a slowdown in mid-market condominium sales. 

On the other hand, developers are now focusing more on high-end and luxury developments, which make up 60 percent of the new launches for the past two years. Notably, the Metro Manila market has only sold 65 percent of the 113,000 units floated for pre-selling and RFO units. Around 40,000 units still need to be sold, half of which are from mid-market developments. 

The event ended with KMC Savills’ bullish outlook for 2024, reporting that the real estate market will continue to pick up. Regarding specific market segments, KMC Savills is optimistic about the office, retail and hospitality sectors. On the other hand, they need to be more aware of the mismatch between the demand and supply in the industrial market and the potential saturation of the mid-end residential market. They also mentioned the emerging markets to look out for, such as the rise of renewable energy and the data center industry, which are currently in their early stages.