PH property sector seen sustaining growth

Prospects remain bright for the Philippine property sector, with capital values and rental rates for office and residential space still trending higher across Metro Manila’s major central business districts (CBDs), property consulting firm Colliers International said.

In a briefing Thursday, Colliers International Philippines director Julius Guevara said sustained demand for office space in Makati CBD had reduced overall vacancy rate to 2.3 percent in the fourth quarter of 2013, the lowest level seen since early 2008.

All office grades saw higher take-up in the fourth quarter, with Zuellig building reaching more than 90 percent in tenant commitment.

Colliers expects vacancy rate to remain at current levels over the next 12 months as tenants sign up to lease space ahead of completion of property development projects.

Due to limited office space availability, Colliers said monthly rental rates for premium grade office space in Makati had risen in the fourth quarter by 1.2 percent quarter-on-quarter and by 4.88 percent year-on-year to between P880 and P1,205 per square meter. Monthly rental rates for Grade A offices were estimated at between P605 and P950/sqm, rising by 1.63 percent quarter-on-quarter and 5.83 percent year-on-year.

The average capital value growth for office buildings in Makati CBD outpaced the growth in rental rates for the quarter, Colliers said. For premium buildings, the average capital values rose to P136,460-P143,360/sqm in the fourth quarter, up by 1.54 percent quarter-on-quarter and by 4.29 percent year-on-year.

Guevara said the average rental rates had also increased in Bonifacio Global City and Ortigas CBDs. In general, he said the average rental rates in Metro Manila were higher but not yet exceeding the highs seen in 2007. He added that local office space rental was still one of the cheapest in the region although higher than those in Karachi, Chennai and Bangalore.

Through 2014 and 2015, Colliers expects an average of 570,000 sqms. of net usable office space to be delivered to sustain the requirements of the business process outsourcing sector.

Colliers said residential vacancy in Makati CBD increased to 11 percent in the fourth quarter of 2013 from 10.1 percent in the previous quarter but this was projected to decline to 9 percent in the next 12 months. Overall vacancy rate in BGC “surprisingly” declined to 5 percent in the same period but Colliers expected this to rise to 7-8 percent this year due to the influx of new supply.

Monthly rental rate for premium three-bedroom condominium units in Makati CBD grew by a modest 0.4 percent quarter-on-quarter to P550-P1,060/sqm but compared to a year ago, this was higher by 6.83 percent. For similar units in Rockwell Center, premium rental rates rose by 1.2 percent quarter-on-quarter and 5.37 percent year-on-year to P725-P1,020/sqm. In BGC, premium rental rates for comparable units were P610 to P1,010/sqm per month, up by 1.73 percent quarter-on-quarter and 5.94 percent year-on-year.

The average premium secondary capital values in the Makati CBD were about P3,000/sqm higher than in Fort Bonifacio in the fourth quarter.