PROPERTY consultant Santos Knight Frank (SKF) sees a “return to normalcy” in the real estate market with more demand seen going back into the market, particularly in the office space segment.
Rick Santos, SKF chairman, said take up doubled in the first half of the year with new entrants coming back to the market.
SKF data showed a net absorption of 281,000 square meters (sq.m.) in the first half, which is a 125 -percent increase from the 125,000 sq.m. recorded for the full year of 2023.
“While the past years have been challenging for real estate, particularly the commercial sector, 2024 is set 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,” Santos said.
Morgan McGilvray, SKF senior director, said demand for office space has started to pick up as vacancy rates have begun to come down, driven by outsourcing and offshoring operations that still prefer locating to the Philippines.
“We’re starting to see the vacancy rate go down, and we’re even starting to see the average rental rate come down a little bit too,” he said.
Among the Asia Pacific offshoring hubs, the country stands out as the most well-rounded location, particularly in terms of workforce demographics and business costs, skills and growth dynamics, saidMcGilvray.
As companies commit to long-term workplace strategies, tenants are expanding workspaces, starting fit-outs and leasing in the central business districts of Makati and Taguig, SKF said in a statement.
“This 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,” SKF added.
Makati spaces continue to command the highest average asking rent at P1,256 per square meter (sq.m.) a month, 22.9 percent higher than the overall average of P1,022 per sq.m. per month. Taguig follows closely at P1,250 per sq.m. per month.
A total of 127,000 sq.m. of office stock was delivered in the first half of the year, while another 299,000 sq.m. is set to come online in the latter half.
SKF expects another 360,000 sq.m. of office space to come online up until 2027. “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 said.
New residential developments, meanwhile, are pushing the boundaries of luxury living in Metro Manila, setting the stage for the metropolis to join the super prime market – areas with projects commanding at least $10 million per unit, SKF said.
The 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 per sq.m., have cemented Manila’s top spot in Knight Frank’s Prime Global Cities Index for the first quarter of the year as the fastest-growing luxury residential markets, it added.
