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PHILIPPINES | RESIDENTIAL
3Q 2016
10 NOVEMBER 2016
Forecast at a glance
Subdued outlook
amid construction Demand
In 3Q2016, weaker absorptions were recorded
across major business districts.
rental market
Only one out of seven projects set for completion
in 3Q2016 was delivered. The delay in
completions is attributed to the acute lack of
skilled construction workers.
Joey Roi Bondoc
Research Manager | Philippines Vacancy rate
Vacancies continued to rise despite the slowdown
Construction delays continue to plague several in delivery. This is due to completions that are
residential projects under construction which results now starting to trickle into the market.
in a significant decrease in actual completions. For
the third quarter of the year only one project was
delivered out of the seven originally slated for Rent
completion. The construction sector remains tight Despite the slowdown in deliveries, rents
and the shortage will be exacerbated by the continued to soften due to slow absorption.
governments plan to intensify infrastructure
development.
Vacancies around the central business districts have been Colliers recommends that developers look into worker
rising despite the slowdown in project completions. This is accommodation projects to cater to the highly-mobile
due to recent completions that are now starting to trickle young urban professionals who cant afford to own their
into the market. Despite the slowdown in deliveries, rental own apartment yet or rent a condominium unit within the
rates continued to soften as a result of increased
established business districts such as Makati, Fort
vacancies. We encourage developers to be more
proactive in exploring creative lease models as investors Bonifacio, and Ortigas Center.
now face an increasingly challenging rental environment.
But developers must ensure that the worker-
Makati CBD Residential Stock accommodation projects have amenities similar to
condominium developments in the CBDs to entice more
30K 25% users.
25K 20%
number of units
20K
15%
15K
10%
10K
5K 5%
K 0%
1Q16
2Q16
3Q16
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
4Q16F
1Q17F
2Q17F
3Q17F
1Q16
2Q16
3Q16
2001
2002
2003
2004
2005
2006
2008
2009
2010
2011
2012
2013
2014
2015
4Q16F
1Q17F
2Q17F
3Q17F
Source: Colliers International Philippines Research
Softer rents across CBDs Rockwell rents declined by 1.3% to PHP942 per sq m a
month. Rental rates are projected to slide by 2% to 4%
Despite the slowdown in deliveries, rental rates continued over the next twelve months.
to soften due to slow absorption.
Ortigas center rents posted the slowest drop at 0.4%.
Rental rates for premium three-bedroom units in Makati Rents are now at PHP516 per sq m a month from
CBD declined by 1.3% to PHP847 per sq m a month from PHP518 per sq m a month in 2Q2016. We see rents in
PHP858 per sq m in the previous quarter. The rental rate Ortigas declining between 2.5% and 5% in 2017.
drop was slightly faster than the 1.2% decline recorded in
2Q2016. With the substantial amount of new supply in
2017, rental rates in Makati CBD are projected to drop by
around 5.1% to 5.4% over the next 12 months.
Prime 3BR Units Residential Rents
1200
PHP / sq m / month
1000
800
600
400
200
0
4Q16F
1Q17F
2Q17F
3Q17F
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
1Q16
2Q16
3Q16
Capital values drop amid softer Prime 3BR Units Residential Capital Values
outlook 180K
Capital values for Makati CBD residential properties 160K
PHP / sq m / month
140K
declined by 0.7% to PHP146,488 per sq m per month
120K
from PHP147,579 per sq m a month in 2Q2016. Fort
100K
Bonifacio prices declined by 1.8% to PHP143,691 per sq 80K
m per month. Prices in Rockwell also slid to PHP158,486 60K
per sq m per month, a 1.1% drop compared to average 40K
prices in the previous quarter. 20K
K
Due to a subdued outlook on the residential market, we
4Q16F
1Q17F
2Q17F
3Q17F
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
1Q16
2Q16
3Q16