Corporate News



By Keith Richard D. Mariano, Reporter


Bed space leasing business booming in Manila




Posted on November 01, 2016


HEAVY TRAFFIC has turned bed space leasing into a lucrative business within the metropolis, with demand not seen to decline anytime soon as more companies open and the economy improves further, according to real estate consultancies.

A major thoroughfare is clogged with traffic as an overhead train passes by in Manila in this photo taken on Jan. 11. -- AFP
The traffic situation in Metro Manila has made renting bed spaces or living in dormitories a option among workers in the region, Jettson Yu, managing director of PRIME Philippines, said in an e-mailed correspondence.

“Since the workers spend two to three hours on the road, they would rather rent a place like a halfway house,” Julius M. Guevarra, director and head of the research and consultancy advisory services at Colliers International Philippines, noted in an Oct. 27 interview.

Claro dG. Cordero, Jr., head of research and valuation at Jones Lang LaSalle Philippines, attributed the growing demand for “short-term accommodations as weekday-home alternative” from workers to the ”worsening” traffic conditions as well.

“This sector is expected to further grow, as more and more companies choose to set up their offices in Metro Manila, not to mention the worsening traffic condition, which makes it more feasible for employees to get a bed space and go home to their families every weekend,” Mr. Yu noted.

The demand for rental housing will supposedly remain strong despite the development of townships or mixed-use estates outside the National Capital Region, a trend that property developers expect to decongest the metropolis.

“I don’t see the demand for bed space or dormitories dropping anytime soon, even with numerous township developments being built all around the Philippines. Township developments outside Metro Manila will just merely cater to a different market within its vicinity and will not directly impact the population in Metro Manila,” Mr. Yu said.

Mr. Guevarra, meanwhile, noted that heavy traffic conditions will continue to confront workers in the region “unless we build another Metro Manila.”

“There’s always going to be demand from people who want to live closer to the central business districts because of the lifestyle. Being closer to the workplace or being closer to retail... they don’t want to be stressed out in traffic,” Mr. Guevarra said.

“I think this is addressing the need of those who cannot afford to purchase or own homes yet. It will address their need by being close to their place of work so they can save on transportation cost as well as time,” he added.

College students remain a source of demand for bed spaces and dormitories in Metro Manila.

“The dormitory market (or student housing market) is driven largely by the growth in student enrollment, which is in a way, driven by the growth of the economy (i.e., more students are able to afford going to school and live in dormitories),” Mr. Cordero said in a text message.

Even in a declining economy, Mr. Cordero noted, the student housing market should expand because more students like to return or stay longer in school.

COMPANIES INVEST IN DORMS
The fast-growing demand for halfway homes has attracted companies to look into the business model. SM Investments Corp., for one, intends to invest in Philippines Urban Living Solutions, Inc., the developer of dormitories under the MyTown brand.

Anchor Land Holdings, Inc. also looks to serve the “mobile employee and student” segments of the property market. It plans to develop 10,000 bed spaces near the Bay Area in Pasay, Bonifacio Global City in Taguig, Vertis North in Quezon City and University Belt in Manila.

“Investors (buyers of condominium units) are also targeting the same market and there will be an influx of condos that will be completed starting 2016 and for the next three to four years. So, that will address some of the requirements of these workers,” Mr. Guevarra said.

Bed space leasing presents a lucrative business, Mr. Yu noted, with the monthly rental rates currently ranging from P3,000 to P6,000 per bed for grade B and C condominiums in Quezon City and reaching P9,000 at the fringes of Makati City.

“To give you a better understanding, a regular studio unit with a floor area of 20 square meters would usually accommodate two persons on a double deck bed, while others can manage to accommodate four persons using two double deck beds,” Mr. Yu said.

As the competition tightens, property developers and other companies looking to foray into bed space leasing have introduced innovations.

“What these new dormitory developers are doing is that they’re providing condo-like amenities to their tenants who are only paying about P3,500 to P5,000. I think this is the main draw -- and as well as the location,” Mr. Guevarra said.

As such, Mr. Yu encourages developers to “tailor amenities based on the needs of the primary market of the condominium and hire a professional property management firm to take care of the building’s safety, cleanliness and on time maintenance of facilities.”

For condominium developers, Mr. Yu recommends a strategic mix of retail tenants for the commercial spaces to serve the needs of workers or students renting their units.

Mr. Claro, meanwhile, cited the need for student housing developments to upgrade their amenities such as social halls, study areas and retail offerings to make them more attractive for the tenants.

“As the student housing market evolves, developers need to continuously upgrade the quality of the accommodation, with particular stress on security, safety and comprehensive property management, as well as incorporate technological advancements,” Mr. Claro said.