BY BERNARDETTE S. STO. DOMINGO, Reporter
Small condo units earn biggest lease
returns in Metro Manila
Returns from lease of residential condominiums in the metropolis ranged from 8% to 15% yearly, with smallest
apartments earning the highest yields, property research firm Global Property Guide said in a recent survey. In a study released
last month, it said studio apartments in Metro Manila’s prime areas — Makati central business district, Ortigas
Center, Eastwood City, and
Bonifacio Global City — could earn between 13% to 15% in rental returns.
The highest returns, however, are enjoyed by studio units measuring about 30square meters at an average
of 15.1%. Larger studio condo units or
about 40 sq.m. big, earn slightly lower returns at 12.9%. Rental returns are the
expected gross annual rental earnings from a property, expressed as a percentage of the property value.
The study said that one to two bedroom units measuring 50 to 90 sq. m. could pull in around 12% to 15% in
rental rates but smaller condo units or about 60 sq. m. earn the highest at 15%. One to two bedroom condo units,
measuring
80 sq. m., could rake in lower returns at 11.5%. “The pattern is unusual. Instead of a smooth progression from high-yielding
units to low,
we have high to low with highyielding ‘ridges’ or ‘lumps’ at particular apartment
sizes — which correspond to the smallest case of a particular number of bedrooms,” Matthew Pollock, Global Property
Guide, publisher was
quoted as saying.
The property research firm said interest rates in the Philippines are at historic lows, making such condominium
unit returns highly attractive. It noted yields for the 364-day Treasury bills were less than 3.82% while interest rates on
oneyear time deposits are around 1.5% to 2% annually. A five-year time deposit returns only 5% per annum, and a 5-year T-bond
earns 5.68%.
“Demand for residential condominiums in Metro Manila has been boosted by strong economic growth, particularly
by the rapid growth of business process outsourcing firms, including call centers,” Global Property Guide said.
It
stressed contact agents form a new breed of young urban professionals with tremendous purchasing power. Because most call
center agents work at night, they need condominium units that are right next to their work place.
“The lesson is
clear - to earn good money, buy a small unit in Metro Manila’s business districts, with very small rooms. The returns
will be significantly better than in most cities in Asia,” Mr. Pollock said.
