The capital values or prices of three-bedroom luxury residential condominium units in three central business districts (CBDs) will continue to rise this year while rental rates will go down, according to the Philippine arm of real estate firm Colliers International.
“Given the high sales volume in the pre-selling market, Colliers sees condominium prices rising further over the next 12 months,” the real estate firm said in its latest quarterly market report. The forecasts cover the three business districts in Metro Manila: Makati, Fort Bonifacio and Rockwell.
However, rental rates of condos in the CBDs will continue to decline, which Colliers attributed to the increased interest in developments in the “fringes” of these CBDs that offer more affordable rates. “The units in the fringes serve as halfway houses for millennials and other professionals who opt to live near their place of work during weekdays but go home to their families during weekends,” explained Colliers.
Though the forecasts cover luxury or high-end condos, they also give an indication of how the broader residential condominium market will do this year.
The vacancy rate of residential condo units across Metro Manila are also increasing and will continue to do so in 2017, explaining the declining rents. Placed at around 10 percent by end-2016, Colliers forecast that this will range from 12 to 16 percent in the next 12 months, due in part to the large number of units that will open this year.
The real estate firm also noted that the take-up in the pre-selling market rose for the first time in five years, increasing 25 percent year-on-year. “Colliers attributed this to the favorable interest rate environment which still encourages buyers to acquire condominiums,” it added in the report.
Outside of the major CBDs, Colliers also said that there will be a growth in the reclaimed area in Pasay City where the SM Mall of Asia and the new casino resorts are located. It added that bulk of the condo unit supply will come from the area in the next four years.
Lorenzo Kyle Subido is a staff writer of Entrepreneur PH