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Is Manila's rental market prepared to embrace trends, overcome challenges, and plan for the future?


December 4, 2023

Understanding the dynamics of the rental market, particularly in the residential sector, is a critical endeavor for various stakeholders. Investors armed with insights into market trends can identify potential risks and lucrative opportunities. For government organizations, this analysis guides policy-making and urban planning. Tenants, on the other hand, benefit by gaining the knowledge necessary to make informed decisions regarding costs, regulations, and current practices.

The rental market, an integral component of the real estate sector, involves the supply and demand for leased properties. In this context, landlords charge rent for the use of their premises, paid on a per-use basis by renters. While rental demand exists across various real estate categories, including residential, commercial, and industrial, this essay will concentrate on the dynamics of residential buildings.

In the context of Metro Manila, 2021 witnessed a resurgence in demand for affordable rentals. This trend emerged as individuals returned to the office or sought proximity to their workplaces while adapting to more flexible schedules in the new normal.

Renting remains an immediately accessible option for those not ready to invest in their own property, especially for individuals not based in the Metro. Concerns about co-living in high-density spaces during a pandemic have prompted property sellers to leverage amenities such as study and work stations, open-air leisure facilities, and updated safety measures to address these apprehensions. The growing interest in luxury rental properties is also noteworthy, indicating a more evenly distributed market for both rental and purchase properties in Metro Manila.

The first quarter of 2021 saw a nearly equal distribution of leads for properties to buy and properties to rent, signaling a shift in seeker priorities influenced by the pandemic. The lockdown periods had posed challenges for tenants, particularly in the leisure and tourism sectors, resulting in increased vacancies and reduced rental rates. However, gradual recovery is evident, thanks to government initiatives such as rental relief programs and the phased reopening of businesses.

The pandemic has expedited the adoption of digital platforms, making online transactions more appealing due to safety concerns. Technological advancements, including virtual tours, have transformed the property viewing process, enabling potential tenants to explore properties remotely. This immersive experience provides a detailed view of the property, facilitating informed decision-making without physical visits.

The integration of digital payment systems has revolutionized rental transactions. Landlords and property managers can now accept rent payments online, ensuring a quicker and more convenient process for both parties. These systems also offer secure and traceable records of transactions, mitigating the risk of payment disputes. Some platforms even provide automated payment features, guaranteeing landlords receive their rent on time.

To thrive in the evolving rental market, stakeholders must stay abreast of market trends and adapt their strategies accordingly. This could involve leveraging technology to reach potential tenants, offering flexible rental terms, or investing in properties in areas experiencing high urbanization rates, such as Manila and Cebu.

With a predicted positive rental growth in 2023, landlords and property managers should prepare to capitalize on this trend. This might involve reassessing rental prices, enhancing property features to command higher rents, or expanding their portfolio to meet the growing demand in the ever-evolving rental landscape.




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