Developers urged to tap short term lease market
By Catherine Talavera (The Philippine Star) | Updated May 15, 2017 -
12:00am
Real estate developers with large inventories of ready-for-occupancy
(RFO) units are urged to tap the short term lease market to avoid the
deterioration of the project’s value, a property consultancy firm said. File
MANILA, Philippines - Real estate developers with large inventories of
ready-for-occupancy (RFO) units are urged to tap the short term lease market to
avoid the deterioration of the project’s value, a property consultancy firm
said.
In its first quarter 2017 property market report, Colliers
International noted of an oversupply of studio and one-bedroom units in the
Metro Manila market, caused by the aggressive
launching of these unit types over the past three to five years.
“For companies that have significant ready-for-occupancy (RFO) units,
Colliers believes that leasing out these units either individually or even as
shared units makes sense, as long as the leasing schemes do not go against the
market positioning of the properties and do not lead to a deterioration of the
projects’ perceived value,” Colliers said.
At present, studio and one-bedroom units account for about 70 percent
of the Metro Manila residential market supply, according to the property
consultancy firm.
Colliers Deputy Managing Director Richard Raymundo said in a briefing
Thursday, that about 20 to 25 percent of completed residential buildings remain
unsold.
“In terms of inventory, when you
look at the average of those that are finished already, they’re probably close
to 75 percent sold to 80 percent sold.,” Raymundo said.
“So there’s this 20 percent that remains in the inventory-- it’s still
a problem for a developer particularly if it’s a big development,”he added.
To address this problem, Colliers suggests that developers offer their
properties for short term lease, given the present demand in the said market.
Among factors driving demand for short term lease properties is the
rise of both foreign and local tourists.
The property consultancy firm said about 60 percent of international
visitors make a pit stop in Metro Manila before going to their respective
destinations in the Philippines, while an average of 500,000 domestic tourists
visit the country’s capital each year.
Colliers also mentioned the working millennial and OFWs on vacation as
possible target markets for the short term lease market.
Moreover, Colliers cited the Century Properties Group as a developer
that has already tapped the short term lease market, particularly with its
Siglo Suites project, which helps owners effectively lease out units to
short-,medium-, and long-term guests and tenants.
“The scheme also strengthens and enhances the security of owners and
residents,” Colliers said.
Furthermore, the property consultancy firm recommends developers to
offer RFO through rent-to-own schemes and be more aggressive in providing
flexible and extended payment terms, to be able to entice more consumers to
acquire these units.
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