Manila residential vacancy rate inches up to 7.2% in Q3

Newly turned-over units pushed vacancy upwards.

According to a JLL report, Manila’s residential supply grew by around 478 units in Q3 2024. Newly turned-over units came from Park McKinley West – Tower B in Taguig City. New developments in the central business districts of Taguig City will add 553 more units by year-end.

The vacancy rate recorded a slight increase and settled at 7.2%, a 7.47 bps increase q-o-q, as newly turned-over units pushed vacancy upwards.

Here’s more from JLL:

Demand in the residential lease market remained positive with a net absorption of 390 units in Q3 2024. The majority of move-ins came from foreign and local executives. Most of the firms continued their hybrid work arrangements.

Similarly, sales demand in the residential market remained afloat as foreign and high-net-worth local investors showed interest, especially in the central business districts of Makati City and Taguig City.

Rents grow while capital values shrink

Rents expanded minutely by 0.1% q-o-q, coming up to PHP 843.0 per sqm, per month. Stable demand enabled some unit owners to push rent upwards.

On the other hand, capital values remained nearly unchanged and settled at PHP 295,771 per sqm in Q3 2024, as the market continued to stabilise.

Outlook: Rents and capital values may continue to grow, albeit slowly, in the near term

Stable leasing by executives may reduce vacancies. However, RTO rates are likely to remain steady due to hybrid work. Meanwhile, sales demand may rise with a potential easing of interest rates. Further, new supply by year-end 2024 may temporarily increase vacancy.

Rents are expected to grow further, driven by sustained demand from both local and foreign executives as well as high-net-worth individuals. Similarly, capital values may experience growth as new prime assets get turned over in the coming quarters.