Bedspace developments cater to growing young workforce
THE Metro Manila condominium rental market will face a growing challenge over the next year from the growing dormitory/bedspace segment catering to the millennial workforce, according to real estate consultancy firm CBRE Philippines.
In a report CBRE noted that several developments apart from new condominiums being built in major business districts could challenge the residential rental segment.
“In consideration of the millennial workforce, such developments are in the form of dormitories and bed spaces,” CBRE said.
CBRE noted that the robust Business Process Outsourcing (BPO) sector continues to be one of the main drivers for local condominium demand.
“Latest data from the IT and Business Process Association Philippines (ITBPAP) showed that about 1.15 million full-time employees (FTEs) in the sector are expected this year,” CBRE said.
The report said this would expand the workforce in the CBDS, which would ordinarily create more demand for condominium units.
“Hence, it will be a great opportunity for condominium developers to tap the young professional market, or investors looking at renting out spaces to millennials,” the report said.
However, CBRE noted that the demand for condominiums could be challenged by the emergence of alternative rental properties such as dormitories and bedspaces, as they are more attractive to the millennial market due to lower rates.
“These offer prudent and more affordable rental rates compared to ready-for-occupancy (RFO) condominiums,” CBRE said.
Several developers have started to take notice of the dormitory and bedspaces market, such as the SM Group, which recently reported that it would acquire a minority stake in Philippine Urban Living Solutions’s MyTown dormitory brand.
Also, high-end developer Anchor Land Holdings Inc. has expressed its interest in the bedspaces market, as it has formulated plans to put up 10,000 bedspaces in branded urban dwellings in the next five years.
With the interest for alternative residential units both from developers and the millennial workforce, CBRE noted that the number of leased condo units could go down.
“Given this, residential projects for turnover would likely experience a modest downturn in terms of leased units due to the emergence of such substitutes,” the report concluded.