The luxury market dominated Manila’s property sector with a price growth of 21.2 percent—the fastest across the world according to Knight Frank’s Prime Global Cities Index.
“Strong investor confidence in the Philippines during the current Ferdinand R. Marcos Jr. administration has buoyed the real estate market despite rising interest rates,” Santos Knight Frank (SKF) Chairman and CEO Rick Santos told reporters recently in the company’s Real Estate Outlook 2024 held in Makati City.
“Pent-up demand for prime properties, the return of the residential leasing market, and the tight supply of developments have contributed to significant price appreciation especially in central business districts,” Santos explained.
In fact, Manila even surpassed the heavyweights such as Dubai and Shanghai in terms of achieving a high growth rate. “Manila’s prime residential sector had the fastest growth across the world at 21.2 percent, overtaking Dubai, Shanghai, Mumbai, and Madrid—evidence of strong buyer appetite for luxury homes in the Philippines,” Santos pointed out.
In it’s 12-month and 6-month % change, Dubai posted 15.9 percent and 12.3 percent respectively. According to Santos Knight Frank’s research, Manila is not the only place where investors are buying the pricey projects. It identified Pampanga, Bulacan, Cavite, Laguna, Tagaytay and Batangas as the current favorites of investors.
Among Manila’s most expensive projects are Banyan Tree Residences by TransAsia (P800,000 per sq m), Balmori Suites by Rockwell Land (P600,000 per sq m), Aurelia Residences by Shang Properties (P431,000 per sq m) and Haraya Residences by Shang Properties (P310,000 per sq m).
Amid geopolitical uncertainties in the region, the Philippines continues to attract investors from the US and East Asia—this is key to the expansion of the commercial estate sector, including BPOs, manufacturing, and retail, according to Santos.
Office: The flight to quality and better experience
In his presentation, SKF senior director, occupier strategy solutions Morgan Mcgilvray said the retail industry is adapting to the post pandemic environment as retailers at core and road concepts such as off-mall locations. “We are also seeing the expansion of flagship stores and the evolution of mall culture highlighted by experiential retail,” said Mcgilvray in a press briefing.
In 2023, SKF observed the significant emergence of increased consumer spending termed as “revenge spending”. This trend in retail sales comes at the heels of the proliferation of flagship stores and roadside retail, with the likes of international brands in areas such as Fort Bonifacio, Makati, and Quezon City.
Meanwhile, in an email interview, homegrown coffee shop Bo’s Cafe is bullish on its prospects in 2024 as the company is currently ramping up its efforts to heed the market demand to open in more locations in Metro Manila and the National Capital Region, with the bulk of their growth to come from franchising franchising, with select company-owned stores in strategic locations.
Bo’s Coffee has definitely benefited from revenge spending. “We’ve achieved over a 100 percent increase versus pre-pandemic growth, with a continued uptrend in dine-in sales,” the Cebu-based company said.
Changes in the workplace
In response to the changing times, Mcgilvray pointed out that there are signs that companies now are making long-term plans about their workplace setups.
According to (Y)our Space 2023 (Knight Frank and Cresa’s survey of 350 international multi-market businesses covering 10 million employees globally), 87 percent of firms said they intend to have an office-centric model (such as office-first, office-only, or hybrid) over the next 3 years.
When asked about the role of the office, respondents cited the physical workplace’s role in productivity, organizational culture, collaboration, and employee morale.
The survey further revealed the key amenities that occupiers understand their employees will be needing in the new office environment, with food and beverage offers ranking as the most preferred service/amenity with nearly 17 percent of responses. Occupiers also see the importance of facilities supporting mental wellbeing (14.4 percent) and gym facilities (12 percent).
In the Philippines, occupiers continue to prefer quality buildings that provide good value. Prime buildings’ vacancy rate (17 percent) continued to surpass average office buildings’ vacancy (20 percent) in Q3 2023, even when prime lease rates averaged at P1,244/sq m per month versus the market’s P 980/sqm per month.
In general, Makati City emerged with the highest lease rate in the metropolis, with a weighted average lease rate of P1,143/sq m per month. Fort Bonifacio ranked second at P1,098/sqm per month, followed by the Bay Area at P 902/sq m per month.
“The office market has continued its road to recovery post-Covid. The increased demand from conventional office tenants and flexible office operators has significantly contributed to the upswing in commercial leasing requirements. We are expecting this momentum to continue in 2024,” explained Santos.