Manila (Philippine Daily Inquirer/ANN) - The Philippine property market is headed for another good year this 2013, with urban land values and rental rates in Metro Manila likely to firm up alongside benign vacancy rates, according to property consultant Colliers International.
Colliers International Philippines associate director Julius Guevara said in a briefing that prospects were bright for the residential, office, commercial and hotel/leisure segments in the metropolis over the next 12 months. Demand for industrial estate, a laggard over the years, has also picked up, not from heavy manufacturing players but mostly from logistics and warehouse providers, Guevara said.
Aided by better-than-expected local economic growth and low interest rates, Colliers reported that land values in the Makati central business district (CBD) rose by 5 per cent in 2012 to 291,000 (US$7,100) pesos a square metre and were likely to increase to 307,000 pesos in the last quarter of this year. However, this will still be lower than the 400,000 pesos/sqm valuation in end-1997 before the Asian currency crisis erupted.
The upswing is more pronounced at the Bonifacio Global City, where land values rose 28.1 per cent last year to an all-time high 237,000 pesos/sqm and were seen to increase to 250,000 pesos/sqm by the fourth quarter of 2013.
In the Ortigas CBD, land values increased by 4 per cent last year to 134,000 pesos/sqm and were seen by Colliers to rise to 139,000 pesos/sqm this year.
In the residential segment, Colliers reported that demand for the premium segments remained high in the fourth quarter of 2012, driving vacancy levels below 5 per cent over the last three quarters. As vacancy remains low, rental rates are seen to improve by more than 6 per cent in Makati CBD this year.
For the office sector, the overall vacancy rate dropped to less than 3 per cent mainly driven by the strong demand from the business process outsourcing (BPO) industry.
Average monthly rental rate for commercial office in Makati CBD in end-2012 was estimated at 915 pesos/sqm for premium grade office (up 7.6 per cent year on year) while rents for Grade A and B buildings increased by an average 5 per cent to 735 pesos and 510 pesos/sqm a month.
This year, premium office space in the Makati CBD is seen to command an increase of 6-8 per cent in monthly rental rate as landlords gain more pricing power resulting from the relatively low vacancy rate.
BGC rental rates, estimated at 740 pesos/sqm a month last year, are seen to rise by 4-5 per cent this year. In Ortigas, rental rates are forecast to hit 585 pesos/sqm this year, up 4.5 per cent year on year.
The average vacancy rate in Makati for all grades of office space stood at 3.48 per cent in end-2012. In BGC, the vacancy rate ended last year at 3.58 per cent, which Colliers expected to increase to more than 5 per cent this year with the entry of new supply. In Ortigas, the vacancy rate stood at 2.94 per cent last year but is seen to rise to 3-4 per cent as new office buildings will be completed by the fourth quarter.
Colliers said it expected total commercial office supply in Metro Manila to reach a total of 7 million sqm by end-2014 from 6.2 million sqm in end-2012. As developers anticipate sustained demand coming from the industry, new supply in 2013 and 2014 would reach record highs of more than 500,000 sqm a year, Colliers said.
"The Philippine commercial office sector is still very competitive," Guevara said, noting that rental rates were still much lower compared to major cities across the region. Annual rental rate in the Makati CBD is estimated at around $20 a square foot compared to close to $120 in Hong Kong, more than $100 in Tokyo and about $40 in Ho Chi Minh, Shanghai and Mumbai.
On hotel and leisure, Colliers noted that developers have been banking on increasing tourist arrivals to justify new hotel development.
In Metro Manila, it estimated that more than 15,000 new rooms would be introduced in a span of four years, half of which would be in the upcoming Entertainment City of Pagcor. But Guevara said rates per room were now expected to soften.
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