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The local property market remains buoyant on the back of “momentous” economic growth and confidence arising from the Philippines’ new investment grade rating, resulting in a sustained increase in property values and rental rates in key central business districts of Metro Manila.
This was based on the first quarter 2013 report issued by property consultants Colliers International that was released Tuesday, which said that the government’s newly minted investment grade status would result in greater activity in the property market for years to come.
“The market is still staying strong in all sectors but due to future deliveries, there’s pressure on the office and residential market,” Colliers International Philippines associate director Julius Guevara said in a briefing.
He said the recent move of the Bangko Sentral ng Pilipinas aimed at preventing asset price bubbles was a very prudent move. “It’s in anticipation of the bubble, which so far we haven’t seen,” he said, reaffirming that the local property market was under no threat of a bubble.
For the office sector, Colliers reported that office rental rates continued to rise in the first quarter as supply remained “muted.”
For the Makati central business district (CBD), monthly premium office rental rates rose 5.1 percent quarter-on-quarter to a range of P860 to P1,100 a square meter. This was seen rising by 7.1 percent to P880-P1,220/sq m over the next 12 months.
Rental rates for Grade A Makati CBD office space rose 0.3 percent quarter-on-quarter to P575-P900/sq m a month in the first quarter, based on Colliers data. Monthly rental rates for Makati’s Grade B offices also increased by 0.9 percent to P450-P565/sq m. For the next 12 months, Grade A and B rental rates were forecast to rise by 6.7 percent and 6.3 percent, respectively.
As with rental rates, capital values for office property have likewise expanded quarter-on-quarter as follows: 4.3 percent for premium office (to P120,000-P131,600/sq m), 0.2 percent (to P71,725-98,890/sq m) for Grade A and 0.7 percent (P49,500-P67,300/sq m) for Grade B.
One factor that has kept office rental space firm was that some developers have held back the completion of new projects in anticipation of excess stock, Guevara said. However, he said developers were “very quick” to harness opportunities.
Office vacancy rate in Makati CBD for all grades in the first quarter stood at 3.38 percent, slightly down from 3.48 percent a quarter ago.
For the residential sector, Colliers said premium three-bedroom rental rates in Makati CDB grew by 2.3 percent quarter-on-quarter to P737/sq m a month. Premium rates for both Makati and BGC were said to be at parity and expected to improve by 8-9 percent over the next 12 months. In Rockwell, where supply is limited, premium rental rates grew by 2 percent quarter-on-quarter and have started to exceed the P800/sq m level. Annual rent is projected to rise by 9 percent.
Residential vacancy rates in Makati CBD eased to 9.8 percent in the first quarter from 10 percent a quarter ago but were projected to revert to 11 percent as new supply come in.