Residential market still on the rise, 3rd quarter market report says

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The secondary market continues to rise up and is expected to reach up to 7,500 units before the year ends. In addition, experts expect the number of residential dwellings to grow by at least three percent in 2018, considering the consistency of household formation.

More than 1,900 units have already been completed in the third quarter of 2017 and should be delivered in the last quarter of the year. Projects in Manila Bay area will be completed soon as well.

So far, 12.7 percent is the overall vacancy rate in Metro Manila, and research claims this will still increase by the end of the year. Rents on the other hand continue to decline in several submarkets. Rents are expected to continue declining by one percent up to three percent in the next years, since supply will grow more within and outside major central business districts.

Despite the fact fully-developed central business districts add supply to the number of available residential markets in the metro, vacancy in submarkets is still growing. Colliers Research however points out several factors to minimize fears on oversupply including: (a) the level of condominium take-up is considerably lower than household formation; (b) the remaining inventory life across segments is well-within developers’ construction periods; and (c) condo prices continue to increase, characteristic of a market far from any correction.


Because of this, the research pushed the developers to address the demand of buyers and tenants though product development, location, structure, finishing, and retail presence. On the other hand, buyers and tenants should look into construction quality, capital investments, and the growth rate of potential rentals as factors in determining huge upcoming supply.

Makati and Fort Bonifacio districts

According to property experts, there is still an ongoing rise in condominium units in major Metro Manila submarkets. To date, five condominiums have been completed at the end of the third quarter of 2017, totaling 1,970 units. These projects are all in Makati and Fort Bonifacio and include Shang Salcedo Place by Kuok Properties, Signa Residences Tower 2 by Robinsons Land, The Meridian at High Street Tower 1 by Ayala Land, and Viceroy McKinley Hill Tower 2 and Paseo Heights by Megaworld.

Metro Manila’s central business districts have a total of 98,600 units at present, and more than 8,700 units will be delivered in the last quarter of the year, albeit that fact that there will be few delays due to some construction constraints.

Numbers by 2021 would eventually push stock by about 142,000 units or about 44 percent greater than current levels, and majority of the projects will come from Manila Bay Area and Fort Bonifacio. Expected current stock increase by 2012 will be from 60 to 150 percent.

Fort Bonifacio still has the biggest share in total stock compare to other Metro Manila submarkets with 25,500 or 26 percent of the total 98,600 units. Upcoming projects in the area include The Uptown Parksuites by Megaworld, Verve Residences and Montane at 8th Avenue by Ayala Land and Time Square West by Federaland.

Meanwhile, Manila Bay area has close to 11,000 existing units or 11 percent of total stock in the metro. Projects on schedule to be completed in the area are SM Prime’s Shore Residences, Federaland’s Six Senses Resort I-Touch Tower and Palm Beach West, and Megaworld’s Bayshore Residential Resort.

Project vacancy expected to reach mid-teens by year-end

The overall influx of supply will continue to push vacancy. Based from 2017 third quarter report, the overall number of vacancy in Metro Manila was up by 12.7 percent from 11.7 percent during its second quarter. There has been a one percent point vacancy growth seen in all submarkets except in Ortigas, which has shown little change since second quarter of this year.

Projections based from market research will increase to mid-teen range by 2018 since about 21,400 units are still to be completed.

Supplies outside major central business districts are also growing which make these major CBDs pressured on the present demand of the market.

STANLEY GAJETE

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