Rental Demand vs Property Sales: Philippine Real Estate Right Now

Is Rental Going Up Amid the High Dollar Rate and Oil Prices

Last year’s expectations for rental yields in the residential market in Manila were to remain flattish, but recent events say otherwise. The condo oversupply and weak investor demand, however, continues according to property consultants. Amid the rising oil prices and peso-dollar rate exchange right now, what could be the repercussions in the Philippine real estate market? Let’s discuss the current trends in rental demand and real estate sales in this article.

Rental Yields in Metro Manila

Rents in Taguig and Bonifacio Global City have now exceeded the numbers before the pandemic, and this will continue until rental properties, including condominium units, are taken up. Residential demand is significantly driven by end-users, especially now that real estate sales might slow down due to the global crisis brought by skyrocketing crude prices.
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Meanwhile, ready-for-occupancy units are also getting more demand because end-users want to move in as soon as they can. Residential rental yields in Manila recorded an average of 4.1% for properties that are sold by property developers. In addition, pre-owned units for rent or for sale are also more preferred due to their affordability.

​Driving Forces for Rental Demand

The residential market’s rental demand is mainly driven by return-to-office setups, students, and expatriates, and lower interest rates. And now that investing in real estate by buying properties is a bit more challenging due to the recent crisis, rentals may become more in demand in the metro as well as in other major cities nationwide.

Since a lot of people may struggle to buy a new house, they will probably choose to rent a house instead. And with the threat of continuous price hikes for crude oil, it would be an elusive dream for many to own a house. Hence, driving rental demand up while real estate sales may slow down in the meantime.
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Developers are slowing down on new residential projects to ease up vacancies until the oversupply is taken up. If you can’t invest in a condo unit or any new property right now, you can opt for a rental unit. RFOs are a good choice since they are ready for occupancy as soon as you have completed the requirements. It’s also highly recommended to wait until the global tensions have subsided to ensure you are getting your money’s worth.

Final Thoughts

With rising petrol prices and a weakening peso, it’s important to weigh your options before making an investment decision. You may want to explore the residential market first, before deciding to rent out a unit. You can visit REALS.PH for the latest listings of properties for sale in Baguio City, Tagaytay, and Metro Manila. You can also send a message with your questions so our licensed Baguio real estate agents can help you out.