NCR rental rates plunge in Q2

MANILA, Philippines — Rental rates in Metro Manila are declining across central business districts, with the Bay Area in Pasay — formerly the paradise of Philippine offshore gaming operators (POGOs) — giving up the most value to date.

Based on a report from Leechiu Property Consultants (LPC), rents across Metro Manila dropped on a quarterly basis even as sales are starting to recover.

LPC director for research and consultancy Roy Golez said sales of condominium units in Metro Manila increased by two percent to 6,643 in the second quarter from 6,508 in the first quarter.

Likewise, Golez said new launches ballooned by 31 percent to 1,761 units, growing the available supply to 82,800, good for at least three years. However, whatever gain the residential market shows in sales has yet to reflect in rental values.

In particular, rental rates in the Bay Area decreased by six percent to P856 per square meter in the second quarter. The district has so far diminished half of its value since the pandemic — from P1,707 per sqm in the first quarter of 2020 — largely due to the POGO ban.

Further, Golez said rents plunged by four percent in Makati and by two percent in Bonifacio Global City (BGC) and Ortigas, while in Alabang, it went up by one percent.

As a result, Golez said investors are making modest yields of two to eight percent, especially as interest rates in housing loans are reaching as high as 10.5 percent.

Most condo sales are happening in the price range of P9 million to P35 million, and Golez said developers are eager to monetize them through flexible payment and rent-to-own deals.

What could help investors recoup capital is when the Bangko Sentral ng Pilipinas decides to cut interest rates twice for the remainder of the year. The BSP has slashed its policy rate by a total of 125 basis points since August 2024.

Meanwhile, LPC director for commercial leasing Mikko Barranda said the office market picked up 740,000 sqm in the first half, already hitting 67 percent of 2024’s 1.1 million sqm. The sector also needs at least 312,000 sqm more between July and December.

The information technology and business process management industry remains the largest driver of office requirements, accounting for half of the take-up at 365,000 sqm.