The Philippine commercial and residential real estate markets registered significant growth in the first half of 2024, with office demand exceeding the net absorption recorded in the entire 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,” said global real estate services company Santos Knight Frank’s Chairman and CEO Rick Santos
He noted that “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 to be one of the most competitive offshoring hubs in Asia-Pacific driven by a young talent pool, affordable operating costs, and a robust supply of office spaces,” he added.
Santos also said that 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,” he said.
"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 added.
As companies commit to long-term workplace strategies, tenants are expanding workspaces, starting fit-outs, and leasing in the busy CBDs of Makati and Taguig.
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.
Meanwhile, Makati continues to command the highest average asking rent at P1,256 per sqm a month, 22.9 percent higher than the overall average of P1,022 a month. Taguig follows closely at P1,250.
A total of 127,000 sqm of office stock were delivered in the first half of 2024, while over 299,000 sqm of office stock is anticipated later in the year, with an additional 360,000 sqm projected through 2027.
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 with price tags nearing P1 million per sqm have cemented Manila's top spot in Knight Frank's Prime Global Cities Index for the first quarter of 2024 as the fastest-growing luxury residential market.
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 percent increase, rising from P580,000 per sqm and P250,000 per sqm, respectively, in 2023. Dasmariñas Village and Magallanes Village also saw significant growth, each with a 12 percent increase.