As Metro Manila navigates the complex economic landscape of 2024, the property market demonstrates remarkable resilience and a strategic evolution towards recovery. According to the latest report from Santos Knight Frank (SKF) during the briefing held on July 30, 2024, at Makati Shangri-La Hotel, the first half of the year has shown promising trends across various sectors, despite the prevailing global economic challenges. With the help of the new Real Property Valuation and Assessment Reform Act (PRVARA), our property landscape gets a boost as the law mandates greater transparency and raises valuation standards, making the country more appealing to global property investors.
Rick Santos, Chairman and CEO of SKF, along with Senior Director for Occupier Strategy & Solutions Morgan McGilvray; Director for Consultancy Services Lovelle Taleon; Engineering Head for Energy, Engineering, and Environmental Management Jess de Villa; Associate Director for Investment & Capital Markets Toby Miranda; and Research Manager Leo Ruiz discussed how the first half of 2024 went for office, residential, commercial, industrial, and hospitality property sectors, with residential and commercial segments taking the top spot.
Residential segment growth
Metro Manila keeps its lead in the luxury residential market with 26% YoY growth in Q1, driven by property launches with a maximum price tag close to 1M per square meter—a surge attributed to the limited availability of ultra-high-end options in the country. Despite the growth surge, Manila is still among the most affordable luxury residential markets, attracting more foreign investors.
Condominium prices in key districts reflect this trend, with Makati’s ready-for-occupancy (RFO) units priced between PHP 257,000 and PHP 1,010,000 per square meter. Pre-selling units in Taguig range from PHP 304,000 to PHP 649,000 per square meter, showcasing the ongoing demand for upscale residential properties.
Revenge spending keeps commercial spending afloat
With ongoing and upcoming redevelopments, the commercial segment remains strong, with Quezon City, Ortigas Center, and Makati City as the top three with the most operating mall spaces; and Makati City with the highest upcoming redevelopment rate. This mall metamorphosis is poised to improve the shopping experience, modernizing retail spaces to meet evolving consumer preferences, and is set to use resources more efficiently.
Office market dynamics
Following the lead is the office sector with higher net absorption, surpassing its own record for the entire of 2023. Return-to-office mandates and office expansions, driven by offshoring operations and government transactions, have significantly contributed to the demand in the office market.
Despite a tenant-favorable market with a marginal decline in rents, the total office supply reached 8.5 million square meters, with an additional 299,000 square meters expected to be completed in the latter half of the year. The vacancy rate contracted by 2 percentage points quarter-on-quarter to 18.9%, and average monthly asking rents fell by 1.3% to PHP 1,022 per square meter.
Key office districts such as Makati and Taguig maintain their prominence, with Makati exhibiting a 20.7% vacancy rate and average rents of PHP 1,256 per square meter. Taguig follows closely with a 14.5% vacancy rate and rents averaging PHP 1,250 per square meter.
Industrial sector outlook
The industrial market remains robust, with high demand for distribution centers as the main growth driver—thanks to geographical expansion brought about by improving connectivity—and cold storage facilities driven by the manufacturing and retail sectors. Most activities remain outside the metropolis due to high demand and limited supply, inflating rent rates for industrial facilities within the metro. The limited industrial supply within Metro Manila, totaling 249 hectares of integrated industrial zones, underscores the need for strategic expansions. Rents for standard warehouses in Greater Manila range from PHP 200 to 750 per square meter per month, reflecting strong demand against limited supply.
Flourishing hospitality landscape
The hospitality space booms due to revenge tourism and new hotel openings across the country—which also signals confidence in the MICE industry. The tourism recovery triggers higher demand in accommodation and is projected to grow further in the second half of 2024. Increased figures for both international arrivals and overnight travelers pushes hotel developers and operators for more property developments, prompting sustainable growth in hotel supply.
Prospects in a nutshell
The property market’s future looks promising as policy reforms, economic stability, and strategic developments converge to enhance Metro Manila’s attractiveness for investors and tenants alike. The anticipated completion of significant infrastructure projects, continued investment in luxury residential developments, and the evolution of retail and industrial sectors are poised to sustain the market’s growth trajectory.
As the second half of 2024 unfolds, stakeholders in Metro Manila’s property market can expect continued resilience and opportunities for strategic investments, driven by a well-rounded economic framework and proactive policy measures.
