With strong fundamentals and continued economic growth, the future looks bright for Metro Manila real estate, according to KMC MAG Group’s 2013 Midyear Report launched last Sept. 6, 2013. The report provides information on the key trends and forecasts regarding residential and office markets in the three major central business districts (CBDs) in Metro Manila: Makati, Taguig (Bonifacio Global City), and Ortigas.
Business optimism in the country continues to drive both local and foreign investments, specifically in construction and real estate. The sustained growth of the BPO sector, increase in OFW remittances, and low interest rates are also important drivers in the residential and commercial markets. Consulting and Research Associate Antton Nordberg states, “The local real estate markets have not shown changes that are as drastic as in the Philippine stock markets. Investors remain optimistic towards the real estate sector, and new developments are being carried out in wide range.”
Makati remains to be the leading CBD in Metro Manila, in terms of having the highest concentration of commercial establishments. “The average asking rental rates for premium space in the Makati CBD reached up to 1,027 PHP per sqm, and maximum rate is at 1,200 PHP. Grade A rates accounted for an average of 733 PHP per sqm, with a maximum rate of 950 PHP, while Grade B equaled to 543 PHP per sqm, reaching up to 750 PHP.” The city also has a level vacancy rate at 3.9% which is expected to increase once new supply is completed.
BGC developments in the residential sector are almost sold out, signaling high demand for space in the area. Among the three CBDs, the city has the highest prime yield at 6.0-8.0%. It also has the highest average rental and capital rates, according to the report, “Fluctuation in BGC rental rates is not as strong as the other CBDs, mainly because most of the stock is composed of new buildings. Average rental rate for BGC condos are at 835 PHP per sqm, reaching up to 1,300 PHP per sqm for high-end units. The capital rates are slightly higher than Makati levels, with an average value of 125,438 PHP per sqm that transmits to a spread of 7,500,000 – 15,000,000 PHP for a 2-bedroom condo.”
Ortigas, on the other hand, has the lowest vacancy rate among the three CBDs, pegged at 3.6%. The city has less number of developments compared to Makati and Ortigas, but it poses high yields, ranging between 5.0% and 9.0%. Rental rates are also lower compared to Makati and Ortigas. “The average rental rate for office spaces in Grade A buildings is at 518 PHP per sqm with a maximum rate of 750 PHP per sqm. Meanwhile, office space rental in Grade B buildings are at an average of 497 PHP per sqm with highest rate of 700 PHP per sqm.”
To access a full copy of the report, click this link: http://c.kmcmaggroup.com/Philippine-Real-Estate-2013-Midyear-Report.pdf