The office and residential property markets of Metro Manila were bustling in the final three months of 2018.

According to the real estate consultancy services firm Colliers International Philippines, net take-up of office properties in the fourth quarter of last year came in at 370,000 square meters (sq. m.) or roughly four million square feet (sq. ft.), bringing the total annual net take-up to 1.18 million sq. m. or 12.7 million sq. ft., a record for the capital region.

Both figures exceeded Colliers’ projections of 344,000 sq. m. (3.7 million sq. ft.) for the fourth quarter and 1.15 million sq. m. (12.4 million sq. ft.) for the entire 2018.

“Knowledge Process Outsourcing (KPO) firms led the demand from outsourcing occupants, covering 27% of net take-up in 2018 or about 381,000 sq. m. (4.1 million sq. ft),” Colliers said in its fourth-quarter Metro Manila office property market report.

“Among the KPO companies that occupied space in Q4 2018 are Infosys and AECOM,” it added.

Jones Lang LaSalle (JLL) Philippines, another real estate consultancy firm, noted in a separate report that among the drivers of demand for office spaces in the fourth quarter were offshoring and outsourcing (O&O) firms and online gaming companies.

Among the locations Colliers tracks, Quezon City had the highest share of new office supply in Metro Manila in the fourth quarter: 40% or 152,000 sq. m. (1.6 million sq. ft.).

“This is the first time in 11 quarters that Quezon City accounted for the bulk of new supply in Metro Manila,” the firm said.

“The delivery of new buildings indicates the growing interest in Quezon City,” it added.

The new buildings in the area include Araneta Cyberpark Tower 2 of Araneta Center, Inc., Vertis BPO Phase 3 of Ayala Land, Inc., Robinsons Zeta Tower of Robinsons Land Corp., and Mpire Center of Mpire Development Corp.

“Araneta Center accounted for 60% of Quezon City’s new office stock with Vertis North covering 34%,” Colliers said.

JLL estimated that the average vacancy rate in Metro Manila in the fourth quarter was 6%, “supported by the healthy leasing demand from O&O firms, online gaming companies, flexible workspaces operators, MNCs (multinational corporations), and traditional office space occupiers.”

In 2018, vacancy rate in the region was 5%, according to Colliers, which, it said was in line with its initial forecast.

When it came to rents, the firm said prime and grade A office space in Makati Central Business District (CBD) and Fort Bonifacio continued to command the most expensive rates — from P930 per sq. m. to P1,900 per sq. m. — as of the fourth quarter of last year.

In Metro Manila’s residential property market, Colliers noted that more than 5,100 condominium units were completed in the fourth quarter of last year, bringing the number of completed units in 2018 to 11,800.

“Despite a ramped-up pace of completions that started mid-2018, the 2018 total is 26% lower than the 15,900 units completed in 2017,” the firm said.

The condominium stock of the region by the end of 2018, however, went up 11% to 118,900 units from 107,100 units the previous year.

Fort Bonifacio and the Manila Bay Area accounted for the bulk, or 75%, of the all the units delivered. The projects delivered in the former include Avida Towers Verte of Avida Land Corp., and Federal Land, Inc.’s Central Park West and Grand Hyatt Residences.

Although there was only one project completed in the latter, Shore Residences Building 3 of SM Development Corp., Colliers noted that it contributed 2,000 units to the area’s condominium stock.

“Meanwhile, new units were added to the stock of other business hubs such as Makati CBD, Ortigas Center, and Rockwell Center following the completion of The Lerato Tower 3, Twin Oaks Place East Tower, and The Proscenium at Rockwell’s Kirov and Sakura towers,” the firm said.

JLL noted that the drivers of demand in the residential sale market were local and foreign high-net-worth individuals who typically secure “the biggest and most expensive units from high-end and luxury brands to maximize the value appreciation in major markets.”

“Corporate housing needs by expatriate employees of O&O firms and MNCs continued to drive the residential leasing market,” it added.

Although there were more condominium units delivered in the secondary market, Colliers said that take-up of completed units that were either for lease or re-sale remained strong, with overall vacancy rate in Metro Manila falling to 10.6% in the fourth quarter from 10.8% in the third quarter.

The firm observed a 0.6% increase in average rents in prime three-bedroom units in Makati CBD, Fort Bonifacio and Rockwell Center.

“Despite a flattish pace of increase, this is a reversal from the decline posted from Q1 2017 to Q1 2018. This indicates a sustained demand for condominium units for lease in the secondary residential market starting mid-2018,” Colliers said.

JLL, meanwhile, noted that in 2018, rental rates in Makati CBD, Bonifacio Global City and Pasay City were the highest. Regarding the latter location, where there is a concentration of Chinese online gaming companies, it said, “Landlords are able to ask higher rates due to the willingness of Chinese companies to pay at or close to asking rates.”

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