STEADY growth in Filipinos’ income combined with increased pre-leasing activity reversed a trend of growing vacancy rates in luxury condominiums in the established business districts Makati and Bonifacio Global City in the second quarter of the year, according to a real estate services firm.
In its Philippine Property Digest for Q2, Jones Lang Lasalle Philippines noted that vacancy rates for this segment declined to 6.3 percent from the 7.5 percent posted in the previous quarter.
“Demand drivers in the luxury market include high income Filipino individuals, expatriate employees of the O&O (outsourcing and offshoring) sector and multinational companies,” JLL said.
As of the end of the second quarter, total existing stock of mid-range to high-end residential condominium units was estimated at 246,500, according to the report.
Aside from higher income of Filipinos, another factor driving the demand for the Metro Manila residential market during the period was the strong pre-leasing activity.
“Pre-leasing activity showed signs of improvement from last quarter, as more developments were launched in 2Q16,” JLL said.
The real estate services firm noted, however, that annual new project launches have been declining over the past several years. Only the mid-range and high-end segment saw an increase in licenses to sell (LTS) from the Housing and Land Use Regulatory Board (HLURB) in the first half of the year, while all other segments declined compared with H1 2015.
Among the residential projects launched during the quarter were One Antonio, The Ellis and The Gentry in the Makati Central Business district and Pines Peak Tower 2 in Mandaluyong City.
Meanwhile, rental rates in BGC and Makati commanded the highest prices at P710 to P1,750 per square meter per month for high-end condominium units.
Similarly, capital values in the two established business districts also increased during the second quarter of 2016.
“Average capital values of luxury condominiums in Makati CBD and BGC in 2Q16 increased approximately 1.1 percent quarter-on-quarter,” JLL said, noting that capital values for the segment were increasing faster than rental rates.
Capital values for high-end developments in Makati amounted to P165,000 to P255,000 per square meter, while BGC commanded capital values of P145,000 to P188,000 per square meter.
The reported noted than more than 125,000 units are expected to come online in the Metro Manila residential market from the third quarter of 2016 until 2020, which is seen to put pressure on price growth in the market.
“The residential condominium market is projected to maintain its upward trend in the next few quarters, although the upcoming volume of supply may put downward pressure on price growth,” JLL concluded.