Metro Manila rental yields seen subdued amid high vacancies

Residential Rental yields in some parts of Metro Manila are expected to remain weak this year as developers grapple with unsold condominium units and elevated vacancy rates, property consultants said.

“The current oversupply of condominiums in Metro Manila has placed downward pressure on rental yields,” Jamie S. Dela Cruz, research manager at KMC Savills, said in an e-mailed reply to questions. “The exit of POGOs (Philippine offshore gaming operators), which previously boosted demand, has further softened the market.”

Data from Colliers Philippines showed rental yields in Metro Manila condominiums rose slightly to 4.2% in the second quarter from 4% in 2019. However, the firm said a meaningful recovery is unlikely in the near term.

“We do not see a significant improvement in Metro Manila residential yields for the remainder of 2025 up to 2026 as we are still projecting vacancy rates to hover between 25% and 26%,” Joey Roi H. Bondoc, director and head of research at Colliers Philippines, said.

Colliers data showed that as of the second quarter, 30,500 ready-for-occupancy units remained unsold. Of the total, 32% were from the lower middle-income segment valued at P3.6 million to P6.99 million, while 22% were from the affordable segment priced at P2.5 million to P3.59 million.

The Bay Area, Makati fringe, Pasig and Manila accounted for 35% of the unsold units in Metro Manila.

Mr. Bondoc also noted that rental rates in submarkets are heavily reliant on POGO tenants, such as the Bay Area, remain below pre-pandemic levels. Studio units there now lease for about P700 per square meter (sq.m.) compared with P1,200 per sq.m. before 2020.

The Bay Area — covering Pasay, Manila and Parañaque — posted the highest residential vacancy in the second quarter at 54%.

“Once we see a substantial improvement in vacancy rates and a corresponding rise in rents, then we project yields to marginally increase,” he said. “But given that we still have sizable unsold ready-for-occupancy units in Metro Manila, and with soft demand in the secondary market, we are not projecting a significant increase in yields over the next 12 months.”

Mr. Bondoc added that weak demand is partly tied to hybrid and remote work arrangements. “As a result, employees are no longer required to rent condominium units in Metro Manila and would rather go back to their home provinces and work from home.”

Still, property analysts said landlords could take steps to improve competitiveness.

“Unit owners can differentiate their properties by adding value — such as offering parking spaces, upgrading unit interiors and enhancing amenities such as internet, cable television and security features,” Ms. Dela Cruz said.

She said tenants who could support rental demand include employees under mandatory return-to-office policies, as well as expatriates and professionals who prefer renting to buying.

“As more companies enforce return-to-office policies, occupancy may gradually improve, supporting rental demand,” she said.

“Marketing efforts should focus on tenants with a strong preference for renting, like corporate clients, expatriates, and professionals who reside in nearby provinces but work in Metro Manila,” she added.

Source: Business World

Manila ranks 5th globally in Q2 luxury home price growth

Prime residential prices in Manila rose by 9.1% year on year in the second quarter, ranking the Philippine capital fifth among global cities for price growth, according to the latest edition of Knight Frank’s Prime Global Cities Index (PGCI).

This represents a slowdown from the 26% year-on-year surge recorded in the same period last year, when Manila topped the global rankings.

The PGCI is a valuation-based index that monitors prime residential price movements in 46 cities worldwide, using data from Knight Frank’s global research network. It measures nominal prices in local currency.

Year on year, Manila’s prime residential price growth trailed only Seoul (25.2%), Tokyo (16.3%), Dubai (15.8%), and Bengaluru (10.2%), but outperformed Mumbai (8.7%), Bangkok (7.1%), Madrid (6.4%), Nairobi (5.6%), and Zurich (5.4%).

Manila’s prime residential prices grew faster in April-June than the 1.6% decline recorded in the first quarter.

Over the past five years, Manila ranked among the top markets in terms of real estate price growth at 77.5%, behind only Tokyo (120%), Dubai (107%), Seoul (80.9%), and Miami (80.3%).

Manila’s five-year price growth also outpaced that of Los Angeles (56%), Christchurch (43.9%), Gold Coast (34.2%), Shanghai (32.8%), and San Francisco (32.6%).

“Emerging hotspots like Manila and Christchurch highlight increasing investor appetite in secondary cities,” Knight Frank said.

“Asian cities continue to lead the rankings, but with less vigor than in previous quarters,” it added.

Manila’s prime residential prices also outpaced the 2.3% global price growth in the second quarter.

“We’re seeing a more fragmented market, with some European cities showing surprising strength while former high-flyers in Asia begin to level off,” Liam Bailey, global head of research at Knight Frank, was quoted as saying in the report.

Another analyst commenting on the report, Joey Roi H. Bondoc, director and head of research at Colliers Philippines, said strong demand for units amid limited supply may be helping support Manila’s prime residential market.

“The upper luxury, ultra-luxury segments continue to outperform other market segments, especially the mid-income segment, because the latter is very sensitive to mortgage rates,” he said.

“On the other hand, luxury buyers are awash with cash. If they don’t have the cash right now, probably they sell one or two of their units and then buy another luxury unit.”

The luxury residential segment — typically valued at P20 million and above — has only 3% remaining inventory of ready-for-occupancy units, far below the 32% inventory recorded in the lower middle-income segment, Colliers said in its Second Quarter Property Market Report.

“By prime residential prices, they may be referring to newly launched luxury condominiums in the Core Central Business Districts of Makati, BGC (Bonifacio Global City) and Ortigas. These constitute a very small percentage of the total condominium supply in the market, but are the highest priced units,” Roy Amado L. Golez, Jr., director of research and consultancy at Leechiu Property Consultants, said.

In the coming months, Mr. Bondoc expects more property developers to pivot toward the luxury residential segment.

“More developers will become more prudent when it comes to their launches, but they will cater to the luxury market… so, the share of luxury in the total new launches in Metro Manila will continue to increase,” he added.

“I would tend to think that inflation, interest rates and other factors such as financing and the sourcing of high-end luxury materials will continue to nudge pricing upwards,” Mr. Golez also said.

prime-global-cities-index-q2-2025-12345.pdf

Download PDF • 111KB

Source: Business World

A Shrinking US Housing Market Means Upheaval for Buyers

Companies like Compass, Rocket, and Zillow are trying to create one-stop shopping venues.

The housing market is barreling toward its third bad year of home sales. Once demand roars back, real estate transactions could look different for buyers, sellers, and investors. Anemic home sales are accelerating a housing market reconfiguration long in the making. In the coming years, it may be more common to purchase a home from one of the big public builders than a local developer, or secure a mortgage from the same portal you used when shopping for a home.

Big real estate companies are building digital platforms to keep more parts of the home purchase transaction under one roof—and taking business from real estate brokerages and mortgage lenders. “Anything that makes things easier for people—that’s where the world is moving,” says Tim Bodner, PwC’s real estate deals leader.

The fight for dominance recently spilled into the courts. Compass, the largest U.S. brokerage by sales volume, sued listings portal Zillow Group over new rules regarding listings that are initially viewable only by its agents and their clients. The lawsuit isn’t just a fight over wonky listing rules, but a conflict about the shape of the future housing market.

Consumers have been backing away from buying a home for several years. The number of existing homes sold fell to nearly 30-year lows in both 2023 and 2024. In the first five months of 2025, homes sold at an average seasonally adjusted annual rate of about 4.1 million, down from more than six million as recently as 2021, according to National Association of Realtors data.

The whole sector is under pressure until sales climb to at least five million, says Leo Pareja, CEO of brokerage eXp Realty. That’s far away: The Mortgage Bankers Association expects existing home sales to ramp up in the coming years but to remain below five million through 2027, as prices hold firm and mortgage rates remain above 6%. The path ahead for consumers will look increasingly streamlined—and is rife with both opportunities and risks.

Shifting Winds

 It isn’t just buyers and sellers backing out of the market. The National Association of Realtors, the industry’s largest trade group, is budgeting for its membership to decline to 1.2 million in 2026, from nearly 1.6 million as recently as 2022. That’s in part “due to the housing market’s current headwinds,” a NAR spokesperson says.

“There’s going to be sort of a reckoning” if sales remain slow, says Columbia Business School professor of real estate Stijn Van Nieuwerburgh. “Probably a bunch of people are going to quit this profession altogether.” Where some smaller brokerages see trouble, others see buying opportunities. Compass, a $3.2 billion real estate brokerage based in New York, grew its ranks of principal agents nearly 42% in this year’s first quarter from the year prior, largely because of its acquisitions. “Most brokerages are really struggling financially,” says Rory Golod, Compass’ president of growth and communications. “They don’t have the size, the scale, and sort of the balance sheet to get through this.”

Consolidation is coming to homebuilding, too. At a time when more builders are offering buyer incentives or slashing prices, the big players’ economies of scale allow them to keep costs lower. “In a slower and choppier market, mergers and acquisitions get more common,” says Ali Wolf, chief economist of real estate research firm Zonda. Publicly traded home builders comprised 52% of all new home sales in 2024, a larger share than anytime since at least 2005, Zonda data show. That could rise as high as 65% in the future, says Wolf.

Perhaps most emblematic of where housing is headed is the coming unification of Rocket, the nonbank lender best known for mortgage origination, with mortgage servicer Mr. Cooper and brokerage and home-listing portal Redfin. The three companies “realize that we are stronger together than we would be apart,” says Varun Krishna, Rocket’s CEO. The combined company will be the largest mortgage servicer and second largest lender in the U.S., according to Inside Mortgage Finance data. Redfin, meanwhile, gives them “the brand name and real estate brokerage that they never had before,” says Wedbush Securities analyst Jay McCanless.

Across categories, consumers now expect a more personalized experience, says David Steinbach, global chief investment officer of Hines, a real estate investment manager with $90 billion in assets. “That consumer taste for a better service, better outcome— which only data can do—means the scaled groups are going to win. The big are going to need to get bigger in order to better serve the needs.”

The Future

Companies that derive earnings from the homebuying process—such as listing portals, mortgage companies, and brokerages—have long looked for ways to capture a bigger slice of the pie in a fractured housing market. They may have finally settled on a recipe.

Zillow emerged from the 2021 failure of its volatile business buying and selling homes with a new plan: build a “housing super app” offering a range of housing services to buyers, sellers, renters, and agents in one place.

It hasn’t been a smooth ride. Zillow stock is down 5% this year, and 65%  below its pandemic high-water mark. But its push to integrate mortgages— whether through a mortgage marketplace or a lending arm of its own—into the buyer experience, along with investments in rentals and tools for agents, is finally paying off.

Zillow expects to be profitable under generally accepted accounting principles in 2025 for the first time since 2012. “The silver lining of a bad macro is it forces you to really be crisp about what’s working and what’s not working,” says Zillow CEO Jeremy Wacksman.

In the company’s super-app future, the homebuying transaction will never leave the company’s orbit. The whole process—shopping, hiring and communicating with an agent, talking to a loan officer, making an offer, getting a mortgage, and closing—will happen “in the palm of your hand inside an app like Zillow,”Wacksman says.

Across the spectrum, big players in real estate are envisioning what a less fractured housing transaction looks like. Buyers shopping with a Compass agent now have access to a dashboard to keep track of their communication, forms, to-dos, and referrals.

Realtor.com—a home-listings portal run by Move, which, like Barron’s, is owned by News Corp—sees an opportunity “to create an open marketplace, not just for real estate services, but for mortgage services and more,” says Move CEO Damian Eales. “This part of our business will evolve quite significantly in coming years.”

The Consumer

Mega-companies come with both opportunities and risks for consumers. Rocket, Zillow, and others see the opportunity to cut down on friction for buyers and sellers by uniting disparate parts of the housing ecosystem. “The more integrated the experience is, the easier it is to actually lower costs, and then pass on savings to the person who matters most, which is the consumer,” says Rocket’s Krishna.

That isn’t the way some left-leaning politicians see it. In a letter to the Department of Justice and the Federal Trade Commission, five senators including Elizabeth Warren (D., Mass.) and Bernie Sanders (I., Vt.) said that Rocket’s Redfin and Mr. Cooper deals “may reduce choice and raise prices for American families in the housing market” at a time when costs are already high.

“I couldn’t disagree more,” says Rocket’s Krishna.

No matter how a buyer purchases a home, it pays to consider the competition. Freddie Mac in 2023 said that borrowers who compared quotes from at least four mortgage companies stood to save as much as $1,200 a year compared with those who only sought one offer. “Sometimes the way these platforms work is they basically exploit impatient consumers,” says Columbia’s Van Nieuwerburgh. “It’s nice and it’s convenient, and they basically end up overpaying for that convenience.”

But bigger companies could also cut costs, particularly when it comes to home-building, says Van Nieuwerburgh. “There’s a huge number of very small construction firms that are frankly very inefficient,” he says. Deregulation efforts “could potentially lead to some much-needed consolidation,” resulting in more homes getting built—and more options for buyers.

As companies converge on similar visions of the user experience, they diverge on how it will be structured. Take private listings, for example: Advocates like Compass say sellers should be able to test the market before listing to the whole world, while critics like Zillow and eXp say such networks disadvantage buyers. The debate has split the industry down the middle, and is already changing the homebuying process. While Compass encourages sellers to list privately first, Zillow and Redfin have banned listings that aren’t immediately syndicated.

The industry’s evolution won’t stop with consolidation. “You finally have industry participants…all rethinking how things should work and criticizing existing processes that have been an afterthought for the past century,” says KBW analyst Ryan Tomasello.

Source: Barron's