Daily Tribune‘Return-to-office mandates and office expansions, supported by offshoring operations, have doubled demand in the office market, surpassing 2023’s take-up in Metro Manila’
Rick Santos, chairman and CEO of Santos Knight Frank, the first and largest fully integrated real estate services company in the Philippines.
photograph by Raffy Ayeng for the daily tribune
The first half of the country’s real estate sector, particularly commercial and residential segments, exceeded the sector’s growth in 2023, global real estate services company Santos Knight Frank revealed on Tuesday.
In a media conference at the Shangri-La, Makati, Rick Santos, chairman and CEO of Santos Knight Frank stated that while the past years have been challenging for real estate, particularly the commercial sector, 2024 is seen to be a turning point with significant upticks and tailwinds across all asset classes.
“Return-to-office mandates and office expansions, supported by offshoring operations, have led to a doubling of demand in the office market, surpassing 2023’s take-up in Metro Manila. We expect this to continue as the Philippines remains one of Asia-Pacific’s most competitive offshoring hubs driven by a young talent pool, affordable operating costs, and a robust supply of office spaces,” Santos said.
He said in the luxury residential sector, Manila has maintained its lead at Knight Frank’s Prime Global Cities Index with 26 percent year-on-year growth in the first quarter, driven by new launches that are pushing Metro Manila’s maximum price tag close to P1 million per square meter.
“This surge is attributed to the limited supply of ultra-luxury options in the Philippines. We anticipate increased activity and more projects in this sector in the coming years. In general, we are optimistic that the market is almost close to pre-pandemic levels. The robust demand across commercial and residential sectors indicates a promising outlook for Philippine real estate,” Santos maintained.
Improved office vacancies
Meanwhile, as companies commit to long-term workplace strategies, tenants are expanding workspaces, starting fit-outs, and leasing in the busy central business districts of Makati and Taguig.
Santos said the trend is reflected in Taguig’s leading position as Metro Manila’s preferred office choice, with a vacancy rate of 14.5 percent, lower than Metro Manila’s average vacancy rate of 18.9 percent.
On the other hand, Makati continues to command the highest average asking rent at P1,256/sqm/mo, 22.9 percent higher than the overall average of P1,022/sqm/month. Taguig trails closely at P1,250/sqm/month.
Also, he said 127,000 sqm of office stock was delivered in 1H 2024, while over 299K sqm of office stock is anticipated later in the year, with an additional 360K sqm projected through 2027.
Manila as super prime market
Santos further reported that new residential developments are pushing the boundaries of luxury living in Metro Manila, setting the stage for the metropolis to join the super prime market.
Knight Frank defines super prime as the highest tier of luxury properties, with projects commanding at least $10 million per unit.
The grand launches of exclusive properties like Park Villas in Makati City and Banyan Tree Residences Manila Bay in Pasay City, with price tags nearing P1 million/sqm, have cemented Manila’s top spot in Knight Frank’s Prime Global Cities Index for Q1 2024 as the fastest-growing luxury residential markets.
Meanwhile, strong demand and limited availability in Manila’s prime villages continue to drive capital appreciation. Forbes Park and Ayala Alabang lead with a 13% increase, rising from P580,000/sqm and P250,000/sqm, respectively, in 2023. Dasmariñas Village and Magallanes Village also saw significant growth, each with a 12 percent increase.
Hospitality boom
The year 2024 is set to be a major year for hotel openings, according to Santos.
Five new hotels partially opened within the first half of the year that will add over 2,900 rooms upon full operations.
Launched within the 1st half are Citadines Roces, Ibis Styles Manila Araneta City, Solaire Resort North, Lansons Place Mall of Asia and Grand Westside Hotel.
Somerset Valero Makati, Seda One Ayala and Ascott DD Meridian Park, which will add almost 900 rooms, are set to launch in the second half of the year.
Hospitality markets outside NCR, particularly Cebu, Davao, Palawan, Subic, Baguio and Cagayan de Oro, are also seeing a surge in new hotel projects driven by the boom in tourism.
With the Philippine hospitality industry poised for significant growth in the year’s second half, several high-profile hotel openings are catering to the surge in domestic and international travelers.
