Metro Manila Residential Property Market Report [1H 2020] and What This Means For You

Jones Lang LaSalle (JLL), the country’s leading real estate and investment management firm, has released the Philippine Property Market Overview for the first half of 2020. The comprehensive report highlights key movements and updates in the office, residential, retail, and hospitality sectors of the real estate market in the country. This blog post focuses on the state of the residential property market in Metro Manila.

Residential Property Market

Supply

More than 8,000 units were added to Metro Manila’s residential supply in the first half of 2020, with only 1.3% completed. With the extension in the community quarantine and halt in construction activities, 80% of the second half of the year pipeline is more likely to slip to 2021.

Of the 394,600 existing residential supply, top districts maintain their share, with 50% of 1H20 completions concentrated in subdistricts of Makati City and Taguig City, and fringes of Quezon City. Pasay City is expected to have the second-largest share to total supply pipeline within the next three years, with the completion of projects in SM MoA Complex.

Demand

Metro Manila vacancy rate almost doubled to 6.7% in 2Q20 against 3.5% in 1Q20. It was 2% in 2Q19. This is primarily contributed by higher occupancy reductions in the cities of Makati, Taguig, and Quezon.

Lease Market

Demand Drivers

The leasing market for upper mid to luxury developments source demand from corporate housing needs of expatriate employees who were not reassigned and frontliners and BPO employees for secondary or halfway homes located near their workplace.

Rent Prices

Average Metro Manila residential rent reached a double-digit decline of 14.9% q-o-q to PHP 41,000/month as leasing activities continued to weaken with the prolonged community quarantine.

The cities of Taguig (ranging from Php13,000 to Php220,000 per month) and Makati (Php20,000 to Php180,000 monthly) continue to have the highest average rents across districts.

Sale Market

Residential Sales

In terms of selling, the average cumulative sales rate of ready-for-occupancy developments in Metro Manila reached 99.7% as of 2Q20, translating to a q-o-q net take-up of 29 units during the period.

Meanwhile, the pre-selling market experienced a slowdown in 2Q20. The average cumulative sales rate of pipeline developments recorded a lower level at 94.2%, translating to a negative q-o-q net take-up of about 4,000 units.

Demand Drivers

Local high-net-worth investors or affluent families and/or corporate executives who buy for investment remain to be the major demand contributors for upper-mid to luxury developments. Upper middle-class who take advantage with the flexible terms to purchase units of typically upper-midscale residential condominiums also drive the residential sale market.

Selling Prices

The average selling price of ready-for-occupancy developments experienced a flat q-o-q growth at PHP 180,300/sqm, but the average selling price of pipeline developments started to dip by 0.8% q-o-q to PHP 205,200/sqm due to weaker pre-selling market performance.

What This Means For You

The prolonged community quarantine has further weakened the residential condominium lease and preselling markets of midscale to luxury segments, despite the landlord’s openness for term negotiations to improve takeup performance.

The market remains optimistic to revive demand. There is greater accessibility of residential real estate in the country. In response to the ongoing crisis, several property developers have introduced financial programs to boost the buying power of the market by offering more flexible terms and discount promos.

Likewise, the government has stepped up its efforts to make property buying easier. Pag-IBIG launched promo rates for housing loans in July, which will be available until the end of the year. Members can secure a special low-interest rate of 4.985 percent per annum under the one-year repricing period and a 5.375 percent per annum under the three-year repricing.

If you are looking for opportunities to increase your passive income, invest in a condominium, and make it a self-liquidating asset, talk to a professional real estate service provider and assess your options.

Related Articles

Learn more about property investing. Read more:

• Why Invest In Real Estate Property
• 10 Projects in Manila worth investing
• Is It Better to Hire a Property Manager or Manage My Rental Property Myself?

Full report: https://www.jll.com.ph/en/trends-and-insights/research/philippine-property-market-overview-1h20