Residential vacancy to decline in H2

MANILA, Philippines — Metro Manila residential market vacancy is seen to decline further in the second half, mainly driven by the employees going back to the office and the lack of additional new supply, according to a property services firm.

“Vacancy rate is anticipated to see sustained contraction for the remaining quarters of the year, backed by a healthier volume of demand coming from employees returning to on-site work, as well as absence of additional supply,” Jones Lang Lasalle (JLL) said in its latest Asia Pacific Residential Digest.

JLL reported that vacancy rate in the second quarter stood at 8.7 percent, a compression of 72.8 basis points quarter-on-quarter.

It attributed this to an uptick in lease demand from local and expatriate employees.

“The decline in vacancy levels, in spite of the entry of new supply, reinforces the improving level of leasing demand,” JLL said.

The property services firm said leasing demand maintained its upward trajectory in the second quarter, backed by the developing rate of return-to-office (RTO) by firms, as well as relaxed international travel restrictions, which brought back employees and expatriate executives to the main business hubs in Metro Manila.

“Likewise, the sales market further improved with the majority of pre-selling developments recording positive take-up,” JLL said.

It said more robust economic activities, the stabilization of the economy due to the elections, and manageable COVID-19 cases have encouraged investors to proceed with their purchases in the quarter.

In terms of new residential supply, the quarter saw the completion of 627 units from projects such as The Proscenium Residences in Makati City and The Albany- Kingsley Tower in Taguig City.

JLL said no additional developments are scheduled for completion in the remaining quarters of the year.

Meanwhile, JLL said rents and capital values are projected to steadily rise in the second half on the back of a better performing lease and sale markets.

“The rising inflation rate may affect selling prices, particularly for pre-selling developments, especially with the wholesale index for construction materials in Metro Manila rising by 6.6 percent in March, the highest since 2012,” JLL said.

The property services firm reported that rents recorded an incremental uptick of 0.1 percent quarter-on-quarter, settling at P816 per square meter per month, breaking the consecutive rental decrease observed since the second quarter of 2021.

“The improved performance of rentals, albeit minimal, is attributed to the continuous acceleration of the lease demand with more employees looking for dwelling spaces as they return to the workplace,” it said.

Moreover, capital values continued to rise and settled at P274,160 per sqm, an improvement of 0.4 percent quarter-on-quarter.

“Similarly, the improving sales demand seen in the quarter aided the expansion of selling prices,” JLL said.