Major cities in the Philippines have witnessed an increase in residential vacancy rates during Q3, according to research from Colliers International.
Despite the slowdown in deliveries, vacancies have been observed to increase across the board due to recent completions which are now being put into the market, presumably after the owners have fit out their units. Unlike the improvements seen in residential vacancies during the last quarter, a different story is unraveling in Makati’s Central Business District (CBD) as the overall vacancy rate rose by 62 basis points (8.26 percent), with Grade ‘A’ property vacancies rising by 55 basis points to 4.4 percent.
Overall vacancies in Fort Bonifacio also increased by almost 1 percent, while Ortigas Center vacancies have returned to double-digit territory with a 10.1 percent vacancy. On the other hand, the lack of new completions has led to a further reduction in vacancy rates in Rockwell to around 3.7 percent overall.
Residential rents remained stable in Q3 2015. An average rental growth rate of 1.5 percent was observed during the three-month period for premium residential condominium property in the major CBDs.
The average monthly rent for premium three-bedroom units in Makati CBD amounted to PhP 875 per sqm for the period, higher by 1.57 percent quarter-on-quarter (QoQ) along with Fort Bonifacio, which also increased by 1.26 percent QoQ (PhP 882 per sqm). Growth in rents was highest in Rockwell at 1.82 percent QoQ (PhP 951 per sqm).
Should the completion of an unprecedented 13,400 additional units in the major CBDs by the end of 2016 materialize, Colliers foresees a downward correction in rental rates by as much as 5 percent by the end of 2016. With an estimated 60,000 units being completed in the entire Metro Manila area by the end of 2015, plus another 51,000 units in 2016, leased condominium units in the fringe areas will compete with available units in the major CBDs.
However, worsening traffic conditions have made renting residential units in the CBD a more practical proposition for employees during the weekdays; this phenomenon may soften the impact of a more competitive leasing environment amid elevated levels of condominium stock, according to Colliers.
