Supply of condo units tightening

The strong resurgence of the business process outsourcing (BPO) industry may soon lead to a shortage in Philippine Economic Zone Authority (Peza)-accredited office hubs in Metro Manila, Leechiu Property Consultants (LPC) said.

With demand from mainland Chinese competing with local and overseas Filipino buyers alongside improving consumer affluence, Metro Manila may also see the tightening of residential condominium stock soon.

“Whereas we were so concerned about the glut in the residential sector five years ago, today, it looks like by second half of this year there will be a deficit in condominium space,” LPC president David Leechiu said in a press briefing yesterday.

Residential projects notably in the Bay Area, Makati, Manila, Ortigas and Quezon City and in other areas near offshore gaming locations and existing Filipino-Chinese communities are reporting brisk take-ups.

“Assuming a constant aggregate take-up of 7,757 units, the remaining inventory in projects preferred by mainland Chinese buyers will be depleted in three months,” he said.

Leechiu also observed that strong demand has led to tenants dictating record-high prices for rental units.

Rental units in the Bay area—a favorite hub of offshore gaming locators—climbed by 80 percent in the last three years.

To date, the most expensive residential development in Metro Manila is still Forbes Park, where the entry-level lot deal is around P700 million, based on a land value of P350,000 to P400,000 per square meter.

The most expensive completed residential condominium development to date is Horizon Homes, the residential component of Shang at The Fort, at P540,000 per square meter.

In the office property sector, LPC reported that in just the first three months of 2019, Metro Manila demand for office space from the BPO sector stood at 102,000 square meters.

“We expect for it to grow at a faster pace and reach the forecast 450,000-sq m take-up in 2019 should there be more Peza spaces available in the market,” he said.

He emphasized the need for more Peza space because “it looks like we only have 216,000 sq m of accredited space to be delivered this year.”

Due to the scarcity of Peza-accredited office space, Leechiu estimated that rental rates may rise by 20 percent in these locations. Non-Peza areas are also seen to enjoy a strong rental growth of 10-15 percent, given brisk demand from the offshore gaming sector.