Residential rental rates to soften further – Colliers

RENTAL rates for residential properties in central business districts (CBDs) are likely to decline this year due to expanding supply and the rising attraction of fringe areas, property consultancy Colliers International said.

In Metro Manila, residential rental rates in CBDs declined by 1-1.5 percent in the fourth quarter of 2016, Colliers International Deputy Managing Director Richard Raymundo

“We expect rents to soften in the next 12 months by another 5 percent,” Raymundo said.

Rental rates for a premium three-bedroom unit in the Makati CBD declined by 1.4 percent to P837 per square meter from P847 per sqm in the third quarter.

“With the completion of new units, we expect rental rates in the Makati CBD to drop

In Fort Bonifacio, the rental rates for three-bedroom units slid by 1.5 percent in the fourth quarter to P833 per sqm a month from P848 per sqm year-on-year.

Raymundo said a large chunk of residential supply is slated to enter the market in the coming years. “We’re seeing some weakness in the rental rates because of the supply that’s going to come in the next four years.”

Colliers is forecasting a 54.3 percent surge in new residential stock to 140,061 units in Metro Manila by 2020, from 90,784 units as of end-2016.

On top of the supply factor, colliers in fringe areas as a more affordable alterna

fringe areas as these offer a 10 percent to 15 percent discount,” Colliers said.

The demand for fringe areas is coming from millennials and professionals who place of work during the weekdays,weekdays accordaccord ing to Colliers.

build “satellite communities” in these compact areas, Raymundo noted.

“I think what we’re seeing are satellite communities. You see Vertis in Quezon City. You see Circuit in Makati,” he said.

Last year, projects completed in fringe areas outnumbered completions within the CBDs at 4,800 units against 3,900 units.

Raymundo noted the interest by de by price factors.

to buy a property,” Raymundo said.

Despite the general decline in rental rates, Raymundo noted property prices in the CBDs still going up because interest rates are still low.”

properties grew by 2.3 percent to P180,300 per sqm. In Fort Bonifacio, there was a 2.2 percent increase to P163,200 per sqm and prices rose by 1.1 percent in Rockwell.

“We see Makati CBD prices increasing months while Fort Bonifacio and Rockwell prices will grow by about 8 percent to 10 percent,” Colliers said.

Condominium prices will further increase

Pre-selling take-up in residential units rebounded during the fourth quarter after four absorbed by the market through pre-selling.

- ages buyers to acquire condominiums,” the