Manila's active home resale market props up capital values

Capital values in 4Q20 increased 10% yoy to PHP 269,932 per sqm.

Resale market for upscale and luxury developments remained active according to JLL, supported by the sustained positive investor appetite from local high-net-worth individuals (HNWIs).

Leasing demand recovers with notable new leases and renewals for corporate and staff housing requirements.

Vacancy continues to recover on sustained corporate demand

No development completion was recorded in 4Q20. Around 2,300 units from The Garden Towers – Tower 2 (Ayala Land, Inc.) in Makati CBD; and Times Square West and Madison Park West (Federal Land, Inc.) in BGC have pushed completions to 2021.

Renewed leasing demand from corporate accounts led to vacancy improving by -18 bps q-o-q to 9.1%.

Active resale market props up capital values

Capital values in 4Q20 registered at PHP 269,932 per sqm, up 1.2% q-o-q and 10.0% y-o-y. Stable investor demand for older and recently completed upscale and luxury developments maintained the steady growth of capital values.

Rents in 4Q20 increased by 0.2% q-o-q to PHP 832 per sqm per month due to improved leasing demand from corporate and staff housing requirements.

Outlook: Significant supply expansion in 2021 to keep vacancy elevated

An estimated 2,300 units from delayed projects are seen to be delivered in 2021. Pressure from incoming stock may elevate vacancy levels, particularly in older developments, as we anticipate flight-to-quality by tenants to continue.

Corporate tenants are expected to sustain leasing demand in 2021 on the back of an improving business environment. Housing requirements for expatriate employees are expected to continue to be the major driver of the upscale to luxury market.

Note: Manila Residential refers to the Makati City and Taguig City mid-high and luxury residential market.