Filipino millennials are demanding a different kind of property lease

0

Declining rents, rising vacancies, and excessive units in the Philippine capital

Fort Bonifacio in Manila, Philippines. Maria Maarbes/Shutterstock

Lease out ready-for-occupancy (RFO) units either individually or as shared units as long as the leasing
schemes do not degrade the units’ perceived value and are in line with market positioning, Colliers Philippines exhorted developers in a recent quarterly report.

Tapping the short-term lease market would promote properties better to millennials, who heavily use short-term rental platforms such as AirBnB and now comprise about 40 percent of the workforce, noted Colliers Philippines research manager Joey Roi Bondoc.

Short-term leasing schemes would also appeal to vacationing overseas Filipino workers (OFWs), domestic tourists, and international visitors.

“As developers try to corner a larger fraction of the rental housing pie, they must ensure that their developments have amenities similar to condominium developments in the CBDs,” Bondoc stated. “Since the target occupants are millennials, Colliers proposes that firms apportion amenities and facilities such as gyms, retail shops and lounges with fast broadband internet connection.”

Colliers encouraged developers to expand into worker accommodation projects as demand by highly mobile young urban professionals go from strength to strength in the Philippine capital.

More: 7 most luxurious condo amenities in Metro Manila (and where to find them)

The property consultancy’s recommendation comes amid an oversupply of apartments in Metro Manila. Studios and one-bedroom units now account for 70 percent of residential stock in the city, due to aggressive launches over the past three to five years.

Around 20 to 25 percent of completed residential buildings remain unsold, said Colliers Deputy Managing Director Richard Raymundo in a briefing last week. “In terms of inventory, when you look at the average of those that are finished already, they’re probably close to 75 percent sold to 80 percent sold.”

In the CBDs of Makati and Fort Bonifacio, vacancy rates are expected to reach 15 percent, up from 14 percent previously, in the next 12 months, data from Collier’s report showed. Rents could decrease by around 1-3 percent in the same period, with prices in Fort Bonifacio alone set to see declines of as much as 2.5 percent.

Rent-to-own schemes and flexible, extended payment terms could prove enticing to buyers of RFO units, Bondoc suggested.

Around 22,000 units will be completed this year in major business districts. Majority of this supply will rise around Manila Bay, an area whose stock is projected to top 27,000 units by 2020.

Read next: The Winners of PropertyGuru Philippines Property Awards 2017