The firm suggested it is “time to consider pre-leasing CBD addresses in time for rental compression in the second half of next year.”
What appears to be inevitable in rental costs, specially in the Makati CBD, is the rising price of land. Property consultancy firm Colliers Int’l reports that commercial land in Makati costs P453,000 per square meter. The price is seen rising to P486,000 per square meter by 2018.
In comparison, land prices in Fort Bonifacio, a good portion of which is also managed by the Ayala Group, are slightly lower at P394,000 per square meter and expected to go up slightly to P424,000 by next year.
On the other hand, land prices – and consequently office rentals – in Ortigas Center are hardly moving. This year, Colliers said, the price of commercial land in the third CBD is P165,000 per square meter. By next year, the rate is predicted to go up modestly to P178,000.
According to Colliers International Research, the rise in land prices in Makati is slightly more than two percent on a quarter to quarter basis. Year on year, the increase is 23.55 percent.
What appears to be surprising is the report of 1.97 percent rise quarter on quarter in Fort Bonifacio. On year on year comparison, the predicted increase is 45.28 percent.
The quarter on quarter rise in Ortigas Center is highest at 2.2 percent among the three CBDs. Year on year, the increase appears most modest at 10.39 percent.
This might well be the explanation Ortigas Center is least preferred.
The office supply forecast of Colliers states there was 2,852,615 square meters rented office space in Makati at the end of last year. The total is seen increasing to 2,912,813 sqm. by next year. This could be a result of scarcity of commercial vacant space in Makati and the highest prices of its land compared to the other two CBDs – Fort Bonifacio and Ortigas Center.
The total in Ortigas as of the end of last year was 1,298,773 sqm. The increase to 1,476,109 sqm. by the end of 2018 is considered too modest. The reason, property developers told Business Insight, is the fact that Ortigas is a smaller area compared to Makati and Fort Bonifacio.
The rented office space in Fort Bonifacio was 975,157 sqm. last year. The numbers rise steadily such that by the end of 2018, the total office for rent will come to 1,983,067 sqm., not too far from Makati CBD’s 2,912,813.
The forecast of office supply includes eight locations. Their total supply of office space is seen at 9,525,053 sqm. by 2018. The list includes Andrew Tan’s Eastwood, Mandaluyong and Pasay Manila Bay.
The statement of Colliers that prime office rental cost in the CBD is lowest in the region does not consider the Philippines is also one of the poorest members of the Asean group. The country has a bloated population of 100 million people occupying 300,000 square kilometers of territory.
Indonesia has the biggest population of more than 200 million but its territory is about five times as big as the Philippines.
By Amado P. Macasaet / http://www.malaya.com.ph