KMC Savills presented the latest data and outlook on the country’s property market for 2024. The company’s Research and Consultancy team together with their newly-appointed CEO Joe Curran and COO Cha Carbonell led the presentation.
Curran looked back on the year that was before discussing the current situation of the Metro Manila office market sector.
“Upcoming office completions are set to invigorate leasing activities,” he said, as demand is seen to sustain for 2024 while increase in vacancy rates is expected due to the upcoming multiple office building completion for the year.
BGC remains the favorable location for prime buildings, leading all submarkets with more than 2 million in office stock and an incoming office supply of about 182,000 square meters—the highest in all submarkets in Metro Manila for the past year.
However, noteworthy transactions also occurred in the last quarter of 2023, with about 110,000 square meters of space taken. Leading the charge are the new buildings in Makati, reaching high occupancy rates despite the competitive office landscape.
Metro Manila office lease rates have stabilized post-pandemic to an average of 858 pesos per square meters, down by 6.7 percent from pre-pandemic rates. Remarkably, Iloilo’s lease rates have increased through the pandemic due to the constant demand from the IT-BPM sector, which is seen to continue its expansion outside Metro Manila where there is deemed to be a larger talent pool and relatively lower wages.
In the industrial sector, Carbonell shared that “manufacturing and logistics are paving the way for industrial hubs” with manufacturing accounting for nearly half—41 percent of the current tenant market.
Laguna is reported as the primary location for over half of the warehouse stock. Elevated vacancies, however, may pressure warehouse rents. Particularly noteworthy are the significant decreases in the rental rates of Bulacan, which went down by 42 percent and Pampanga by 21 percent.
In the residential sector, KMC Savills Research and Consultancy Associate Director Joshua De Las Alas discussed the shift on how the middle-market consumers are now leaning more towards PAGIBIG to finance their dream homes outside of Metro Manila.
On top of rising interest rates, the need to live near the place of work has declined, leading to the slowdown in mid-market condominium sales. On the other hand, developers are now putting more focus on high-end and luxury developments, which make up 60 percent of the new launches for the past two years.
Notably, the Metro Manila market has only sold 65 percent of the 113,000 units floated, both for pre-selling and ready-for-occupancy units. Around 40,000 units are still left unsold, half of which are from mid-market developments.
The event ended with KMC Savills’ bullish outlook for 2024, reporting that the real estate market will continue to pick up. In terms of specific market segments, the company is optimistic about the office, retail, and hospitality sectors.
On the other hand, they are wary of the mismatch between the demand and supply in the industrial market and the potential saturation of the mid-end residential market. They also mentioned the emerging markets to look out for such as the rise of renewable energy and the data center industry, which are currently in their early stages.