Metro Manila rental yields may stay flat in 2026

Rental Yields in Metro Manila’s residential market are expected to remain flattish next year amid weak investor demand and lingering condominium oversupply, property consultants said.

“Yields will likely remain flat for the year 2026, with core central business districts (CBDs) recovering faster,” Roy Amado L. Golez, Jr., director for research, consultancy, and valuation at Leechiu Property Consultants (LPC) said.

“Rents in Bonifacio Global City and Taguig have already exceeded pre-pandemic numbers, while other locations remain at a significant discount. This situation will persist until supply is taken up,” he said.

Joey Roi H. Bondoc, director and head of research at Colliers Philippines, said rental yields will likely stay flattish next year as residential demand is driven mainly by end-users rather than investors.

“I think one reason why the ready-for-occupancy promos, for example, of certain developers are working is because the demand is actually end-user driven,” he said in a phone interview.

In Metro Manila, residential rental yields averaged 4.1% in the primary market, or properties sold by developers to end-users, LPC said in its fourth-quarter property market report.

Meanwhile, secondary market yields — which cover pre-owned units offered for sale or for rent by their owners — averaged 4.8%, based on LPC data.

“Secondary market units will continue to generate higher yields versus primary market units, since buyers will be acquiring units from sellers who bought these units at much lower prices,” Mr. Golez said.

Mr. Bondoc added that Metro Manila’s primary residential market continues to face an oversupply of 30,400 unsold units, equivalent to about eight years’ worth of inventory.

Most of the region’s condominium inventory falls under the affordable to lower middle-income segment, with units typically priced between P2.5 million and P6.99 million, Colliers data showed.

“Current prices of condominiums are on the high side, and with challenging rents, this results in lackluster yields. To boost rental yields, prices should remain flat — since we don’t really see widespread price cuts — to allow the market to catch up,” Mr. Golez said.

Joe Curran, chief executive officer at Savills Philippines, expects rental yields in the region to be “broadly stable to slightly firmer” next year, at around 4% to 6%.

He said lower interest rates, return-to-office mandates, and the long-term stay of expatriates and students could help lift rental demand in Metro Manila’s residential market.

To improve rental yields, developers should adopt a more disciplined launch pipeline for condominium projects, Mr. Curran said.

He also cited the need for stronger marketing and proactive maintenance to make unsold condominium units more attractive for leasing.

“While Metro Manila stock continues to grow, supply that remains aligned with genuine end-user and rental demand should support stronger pricing power over the medium term,” Mr. Curran said in an e-mailed reply to questions.

For 2026, Colliers projects residential vacancy to ease to 26% from 26.5% as of end-2025, as developers slow the launch of residential projects in Metro Manila.

Source: Business World

How to Evaluate Your Property’s True Market Value in the Philippines

A practical, step-by-step guide for homeowners, buyers, and sellers

Knowing your property’s True Market Value (TMV) — the price a willing buyer would pay a willing seller in an open market — is essential whether you’re selling, refinancing, settling taxes, or planning investment decisions. In the Philippines TMV often differs from government figures (like BIR zonal values or LGU assessed values), so this guide shows you how to estimate TMV properly, when to rely on official numbers, and when to hire a licensed appraiser.

Quick definitions

• True Market Value (TMV) / Fair Market Value (FMV): The price the market would actually pay today for the property.

• BIR Zonal Value: A government baseline used mostly for tax calculations (transfer taxes, documentary stamp tax, etc.). It’s published by the Bureau of Internal Revenue (BIR) and is not always equal to TMV. (Bureau of Internal Revenue)

• LGU Assessed Value: Used for local property tax (real property tax). Different agencies can use different bases and methodologies.

• Appraised Value: The valuation produced by a licensed appraiser — they attempt to estimate TMV using accepted appraisal methods and professional judgment.

Why TMV usually ≠ the BIR zonal value or assessed value

BIR zonal values are administrative baselines set per zone/street and are used for tax computation; they can lag behind current market conditions or intentionally be conservative for tax policy reasons. In 2020s–2025 there have been policy moves to modernize and standardize valuation across agencies, but zonal values still function mainly as a tax baseline — not a guaranteed market price. If you’re transacting, always compare BIR zonal value to market evidence. (Bureau of Internal Revenue)

The three (main) appraisal approaches — how professionals estimate TMV

Licensed appraisers use one or a combination of these approaches, then reconcile them into a final opinion of value.

1. Sales Comparison (Market) Approach

   • Compare recent, similar sales (comps) in the area. Adjust for differences in size, frontage, lot shape, improvements, and date of sale.

   • This is the most commonly used approach for residential land and houses. (Land Value Philippines)

2. Cost Approach

   • Estimate the replacement cost of buildings/improvements minus physical/functional depreciation, plus land value. Useful for new or unique properties.

3. Income (Capitalization) Approach / DCF

   • For income-producing properties (rentals, commercial lots), value is derived from expected rental income capitalized into value or from discounted cash flows (DCF) for multi-year projections.

Philippine valuation practice follows national standards that align with international valuation principles (Philippine Valuation Standards / PVS). Recent reforms and statutes (including laws passed in 2024–2025) aim to unify valuation standards and improve transparency. (Bureau of Local Government Finance)

A step-by-step DIY method to estimate your property’s TMV

Use this when you want a grounded market estimate before: listing, negotiating, or paying taxes.

Step 1 — Gather the facts

Collect documents and data:

• TCT / OCT, tax declaration, floor plans, photos, title encumbrances, property tax receipts, recent repairs/improvements, lot/building area (sqm), exact address, and any siting or legal limitations.

Step 2 — Check the government baselines

• Look up the BIR zonal value for your barangay/street (BIR website). This gives you a quick baseline for tax-related values but not a definitive market price. (Bureau of Internal Revenue)

Step 3 — Find comparable sales (the heart of the market approach)

Sources:

• Local brokers, recently closed listings, public Registry of Deeds records (if accessible), major property portals, or ask a local licensed broker/appraiser for recent sales. Note sale dates — newer comps are more relevant.

Step 4 — Normalize comparables and compute a base market price

1. Choose 3–6 good comps (same neighborhood, similar lot size/use).

2. Record their sale price per square meter (₱/sqm).

3. Adjust each comp for differences: lot size, frontage, road access, improvements, condition, and sale date (market drift).

4. Compute a weighted or simple average to get a per-sqm baseline, then multiply by your lot/building area.

5. 
   

Example (digit-by-digit calculation):

Comparable sale prices per sqm: ₱5,000; ₱5,500; ₱4,800.

Step A — Add them: 5,000 + 5,500 + 4,800 = 15,300.

Step B — Divide by 3 (number of comps): 15,300 ÷ 3 = 5,100 (average ₱/sqm).

Step C — If your lot = 200 sqm → 5,100 × 200 = 1,020,000 (base market value).

Step D — Adjust for location premium of +10%: 1,020,000 × 0.10 = 102,000; 1,020,000 + 102,000 = ₱1,122,000 (adjusted estimate).

(The example shows the simple sales-comparison arithmetic; in practice you’ll apply more granular adjustments.)

Step 5 — Cross-check with other approaches

• If the property generates income, do a quick income-capitalization test.

• For a house with significant improvements, the cost approach will indicate whether the sales-comparison figure is reasonable.

  
  

Step 6 — Reconcile and pick a value range

• Appraisers typically present a value range and a most-likely figure. For DIY, pick a conservative midpoint and prepare a “sell” and “hold” price depending on urgency and objectives.

Documents and questions to ask (checklist for a professional appraisal or broker talk)

• Title type & number (TCT/OCT), tax declarations.

• Encumbrances, mortgages, pending litigations.

• Exact lot/building area and plans.

• Recent comparable sales (with dates).

• Permits and occupancy certificates (if applicable).

• Zoning restrictions and DPWH/utility easements.

• Flood map / geotechnical concerns.

Licensed appraisers must be PRC-registered; their reports should follow PVS and include methodologies, comps, photos, and assumptions. If you hire one, ask for their PRC license and a sample report. (Professional Regulation Commission)

BIR zonal values, LGU assessed values, and taxes — what to watch

• Transfer taxes and documentary taxes often use the higher of declared sale price or BIR zonal value as a base for tax calculations. Don’t be surprised when tax computations use zonal values rather than the actual sale price. Always compare your negotiated sale price with BIR zonal value to estimate taxes. (Bureau of Internal Revenue)

• Recent policy discussions and reforms (since 2024) are pushing toward more frequent updates of standardized market values and better data systems — this may change how discrepancies are handled over time. (PwC)

When you must hire a licensed appraiser

• Large transactions (multi-millions), estate settlement, expropriation, bank collateral for major loans, or when legal disputes arise. A professional appraisal is the official record that banks, courts, and tax authorities will accept.

Tips to increase accuracy and to negotiate better

• Use recent, local comps (same street or immediate neighborhood).

• Document unique positives (corner lot, good road access) and negatives (flooding, easements).

• Be transparent with buyers: show comps and appraisal summaries. Sellers who can show an appraiser’s report often sell faster and at better prices.

• If zonal value is above your estimated TMV, negotiate with evidence (recent comps) or request a formal revaluation with the LGU/BIR only if you have strong proof.

Common valuation pitfalls to avoid

• Relying only on property portals without confirming closed sale prices.

• Using outdated comps (market conditions change quickly).

• Confusing BIR zonal or LGU assessed values with TMV. (They’re related but not the same.)

Useful official & professional resources

• BIR — Zonal values and guidance. (Use BIR’s zonal lookup as a tax baseline.) (Bureau of Internal Revenue)

• Philippine Valuation Standards / BLGF manuals — for professional valuation standards. (Bureau of Local Government Finance)

• Articles & industry commentary on valuation reform and modernization (explains trends to watch). (PwC)

• Professional Regulation Commission (PRC) / Board of Real Estate Service — for licensed appraiser lists and exam rules. (Professional Regulation Commission)

Final checklist before you list or accept an offer

• ✓ Gather title, tax declaration, receipts, plans.

• ✓ Check BIR zonal value and LGU assessed value.

• ✓ Pull 3–6 recent comparable closed sales (same area).

• ✓ Run the sales-comparison math and do a sanity-check with income/cost approaches if relevant.

• ✓ If transaction value is high or contested, get a PRC-licensed appraiser’s report.

True Market Value in the Philippines is a market-driven figure — best estimated by the sales-comparison approach and cross-checked with cost and income methods. Government figures (BIR zonal values, LGU assessments) are necessary reference points for taxes and permits, but they don’t always reflect what buyers actually pay in today’s market. Use good comps, document everything, and for high-value or legally sensitive transactions, hire a licensed appraiser.

Source: Ziggurat Real Estate

Banks’ real estate exposure slips

Philippine banks and trust entities’ exposure to the property sector slipped at the end of September, amid a decline in real estate investments, Bangko Sentral ng Pilipinas (BSP) data showed.

The industry’s real estate exposure ratio stood at 19.54% as of end-September, falling from 19.61% at end-June and 19.55% in the same period a year ago.

The BSP monitors lenders’ exposure to the real estate industry as part of its mandate to maintain financial stability.

Philippine banks and trust departments have extended P3.451 trillion in total investments and loans to the real estate sector as of the third quarter, up by 7.19% from P3.22 trillion in the previous year.

Based on central bank data, real estate loans climbed by an annual 8.9% to P3.096 trillion as of September from P2.843 trillion a year ago.

Broken down, residential real estate loans rose by 11.4% to P1.188 trillion, while commercial real estate loans grew by 7.41% to P1.909 trillion.

Past due real estate loans reached P158.619 billion at end-September, 7.06% higher than the P148.157 billion seen a year earlier.

Past due residential real estate loans edged up by 5.16% to P110.379 billion, while past due commercial real estate loans increased by 11.7% to P48.24 billion.

Meanwhile, gross nonperforming real estate loans amounted to P116.086 billion in the nine-month period, up 4.06% from P111.554 billion a year ago.

This brought the gross nonperforming real estate loan ratio down to 3.75% as of September from 3.92% in the comparable year-ago period.

BSP data also showed that the banking sector’s real estate investments stood at P354.749 billion at end-September, 5.75% lower than the P376.406 billion recorded last year.

This, as debt securities slipped by 5.51% year on year to P232.496 billion, while equity securities went down by 6.22% to P122.253 billion.

“Banks’ real estate exposure eased to 19.54% at end-September from 19.61% in June, reflecting lower investments in property-linked securities, muted project launches, and cautious lending amid elevated NPLs (nonperforming loans) and high borrowing costs,” Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said in a Viber message.

Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said weak property demand may have weigned on the industry’s real estate exposure ratio last quarter. 

“Banks are rationalizing their real estate exposure because non-performing loans are rising and developers are slowing launches amid weak demand,” he said via Viber. “The BSP’s tighter oversight adds to the caution.”

However, Joey Roi H. Bondoc, director and head of research at Colliers Philippines, noted that bank lending to the real estate sector typically slows in the third quarter. He noted the recent drop in lending was “not significant.”

“We have yet to see a substantial take-up in (the) Metro Manila condominium market, especially in the pre-selling sector,” he told BusinessWorld in a phone interview. “And it only means that banks are still wary to lend to the real estate sector, to the condominium sector at this point. So that’s why, if you look at the exposure of banks to real estate, it’s not a significant increase or decrease. It’s almost (flat), almost the same.”

A recent Colliers Philippines report showed that residential take-up soared by 108% in the third quarter, equivalent to 5,900 units from 2,800 units in the previous quarter. This was the highest take-up since the second quarter of 2023.

For the fourth quarter, Mr. Asuncion said the banking industry will likely grant more loans to the real estate sector following the central bank’s recent rate cuts and increasing demand for residential properties and leasing.

“Exposure ratios should remain broadly stable, with banks balancing growth opportunities against regulatory limits,” he added.

The BSP last week reduced borrowing costs by another 25 basis points (bps), bringing the key rate to its lowest in over three years at 4.5%. It has so far delivered 200 bps in cuts since August last year.

However, Mr. Bondoc said that still-high mortgage rates are offsetting the supposed boost from lower benchmark interest rates.

“But the problem is… the central bank has been cutting interest rates but there is no corresponding decline in mortgage rates by the banks, which again indicates that banks are still a little hesitant to lend to this market,” he said.

Still, Mr. Bondoc noted that holiday bonuses, higher remittances and the peso depreciation will likely spur demand in the domestic residential market.

“Q4 is a strong quarter for condominium take-up because of bonuses for local employees and remittances from the Philippines. And then peso’s depreciating, so it might be a good opportunity for OFWs (overseas Filipino workers) to send home more money and then finally, for example, reserve a condominium unit or buy a house and lot unit in their home provinces,” Mr. Bondoc said.

The peso hit the P59-a-dollar level several times in November and slumped to a fresh low of P59.22 against the greenback on Dec. 4.

Source: Business World