Manila still 3rd cheapest for prime office rent in Asia-Pacific

Manila remained the third most affordable city for prime office rents in the Asia-Pacific region in the third quarter, according to real estate consultancy Knight Frank.

On an annual basis, Manila’s occupancy cost fell by 1.7%, slightly below the average 2.5% decline in the region, a Knight Frank Asia report released on Oct. 22 showed.

The average prime office cost in Manila was $29.64 per square foot (sq.ft.) in the July-to-September period.

“Prime rents in the region fell just 0.1% on a quarter-on-quarter basis, signaling that rents could be bottoming out, supported by growth in Indian markets,” Knight Frank said.

Kuala Lumpur had the lowest average prime office rent in the region at $20.57 per sq.ft., followed by Jakarta with ($26.75), Phnom Penh ($34.13), Guangzhou ($35.60), and Bengaluru ($36.17).

The most expensive rent for prime office space was in Hong Kong SAR ($155.52), followed by Singapore ($125.66), and Sydney ($99.75).

Knight Frank expects Manila to see a decline in rents in the next 12 months, along with Bangkok, Beijing, Guangzhou, Hong Kong, Shenzhen, and Shanghai.

Cities that will see higher rents in the next 12 months include Brisbane, Perth, Ho Chi Minh City, Singapore, Taipei, Seoul and Sydney.

The average prime office vacancy rate in the Asia-Pacific region slipped by 0.2% quarter on quarter to 14.8% in the third quarter, ending consecutive quarterly increases since the second quarter of 2022.

Manila had the 11th highest prime office vacancy rate in the region at 14%. Kuala Lumpur had the highest at 27%, followed by Shenzhen (25.1%), Jakarta (24.9%), Bangkok (24%) and Shanghai (21.1%).

Knight Frank said companies across the region are keeping a close eye on costs amid slower economic growth and geopolitical risks. It noted that leasing sentiment will likely take a hit as firms curb spending.

“Global economic uncertainties have led to more cautious capital expenditure strategies among occupiers, favoring renewals and consolidating office footprints,” Tim Armstrong, Global Head of Occupier Strategy and Solutions said.

Companies that relocate their offices usually opt for smaller spaces, “aligning with cost mitigation needs and the growing acceptance of hybrid work models,” he added.

“While the business sentiment may improve as the Fed eases monetary policy, demand will continue to be tempered by prudent spending and workplace strategies focused on maximizing space utilization,” Mr. Armstrong said.

Knight Frank said the Asia-Pacific prime office sector will still be “tenant favorable” this year. With the delivery of around 12 million square meters (sq.m.) this year, the pipeline supply next year will likely drop by about one-fifth.

“However, as the development peak in the region subsides, any significant uptick in leasing activity could rapidly tighten the availability of prime spaces. This scenario may accelerate the flight-to-quality trend as tenants seek to upgrade their portfolios in a potentially more competitive market,” Mr. Armstrong said.

Source: Business World

Airbnb Hosts Look To Drop the ‘Airbnb'

This April, more than 600 landlords, real estate agents and small-property managers traveled to a swanky resort in San Diego to get advice from Jesse Vasquez. A former salesperson at a hospice- care company, Vasquez now manages more than a dozen properties, in addition to his side hustle coaching his peers. “We don’t have to be relying on Airbnb,” Vasquez told his audience. “Don’t allow these big companies to supply your clients. Build your own house on your own freakin’ land.”

Airbnb, the world’s biggest short-term rental platform, is thriving—it added more than a million active listings in 2023 while posting a record profit. Its hosts, at least those in the US, not so much. Through May of this year, earnings for US hosts had declined in 22 of the past 28 months, according to analytics firm AirDNA. Hosts blame oversupply, regulatory changes and Airbnb Inc.’s own policies. Some, like those at Vasquez’s event, think the solution is to cut out Airbnb altogether.

In part, this is what always happens when people rely on internet platforms to make a living. It’s akin to Uber drivers asking passengers to call them directly the next time they need a ride, or YouTube influencers and TikTok celebrities cutting side deals with brands to secure advertising income they won’t have to split with the platforms. Who likes a middleman?

On Airbnb, there’s a specific opportunity in the shift to mid-term rentals—stays of longer than 30 days but shorter than the leases people sign for their primary apartments. Attracting enough new people to rent an apartment once or twice a week essentially requires a service like Airbnb. If you’re only looking for a few renters a year, it becomes more reasonable to find them yourself.

In practice, though, this strategy is often a way to supplement Airbnb income rather than replace it entirely. Vivian Yip, an Austin-based host who came to Vasquez’s conference, began the shift several years ago and has done well enough to quit her day job. Her property management company now includes more than 20 homes. Still, she relies on Airbnb for half of her bookings. “I’m not strong enough to replace Airbnb,” she says.

Chief Executive Officer Brian Chesky has downplayed the importance of individual hosts circumventing Airbnb’s services. In an email, a spokesperson added that the company offers benefits that are hard to replicate, including background checks, payment processing and insurance. “When bookings and communication move off our platform, we are no longer able to ensure hosts and guests are covered by our extensive built-in protections and support,” they wrote.

Airbnb wants to hold on to those hosts who are focused on longer stays, a group that’s bigger than it was before the pandemic. It’s tailoring its platform to appeal to them. Last summer, for instance, it reduced service fees for stays of more than three months.

For now, the mid-term segment is dominated by large companies such as Anyplace, Blueground and June Homes, but smaller players are also setting up their own booking websites, drawing renters in with lower prices for properties also listed on Airbnb or Vrbo.

For some hosts, the trick is not to find renters one by one but to form relationships with institutions that will bring in regular business. These can be companies helping their employees relocate, or insurers and government agencies in search of temporary housing for displaced families or contract workers.

The interest in direct bookings creates an opportunity for businesses such as Furnished Finder LLC, which charges $100 annually for listings rather than taking a commission. Interest in the site spiked last fall when New York City effectively banned short-term apartment rentals, and in October the platform added more homes than in any month of its 10-year history, according to CEO Jeff Hurst.

Today, Furnished Finder has 300,000 listings in the US. It’s a far cry from Airbnb’s 7.7 million globally, but the company is profitable and plans to hire more engineers and product managers, says Hurst, who was hired in late 2023, one of a wave of former Vrbo employees who’ve migrated to the company.

The hunger to develop alternate strategies to find tenants is a big reason people were willing to pay the $897 Vasquez charged for his conference. He talks up the benefits of rental hosts referring potential clients to one another. “The mid-term space is all about connections,” he says.

Vasquez rented out his first mid-term property to a travel nurse in 2015, then built up his portfolio by making a housing deal with his local hospital in Modesto, California, and managing other people’s rentals. He now brings in more than $80,000 a month in profit.

His social media following exploded after he appeared on a real estate investing podcast last year. The increasing prominence provided a significant boost for what has become an even bigger source of income for Vasquez than rental housing: giving other people advice about rental housing.

After the podcast episode, Vasquez got more than 300 new students for his yearlong mentorship program, which costs $6,500. He says his online mentorship program turned a $1.3 million profit last year. The conference attracted 60 more sign-ups, adding to the 450 people who’ve taken the course. Profit is once again projected to top $1 million. “It’s so crazy to feel like this movement is happening,” he says, “and I get to be a catalyst.” 

Source: Bloomberg Business Week

Can I still increase the rent by 7 percent?

What are the pertinent laws, rules and regulations governing the lease of residential units.

For one, we have Republic Act (RA) 9653, otherwise known as the Rent Control Act of 2009. Insofar as the lessor's capacity to increase the amount of rent, Section 4 of RA 9653 specifically provides:

"Section 4. Limit on Increases in Rent. - For a period of one (1) year from its effectivity, no increase shall be imposed upon the rent of any residential unit covered by this Act: Provided, That after such period until December 31, 2013, the rent of any residential unit covered by this Act shall not be increased by more than seven percent (7%) annually as long as the unit is occupied by the same lessee: Provided, further, That when the residential unit becomes vacant, the lessor may set the initial rent for the next lessee: Provided, however, That in the case of boarding houses, dormitories, rooms and bedspaces offered for rent to students, no increase in rental more than once per year shall be allowed."

Due to our government's aim of continuously providing protection to residential tenants, while at the same time being responsive to socioeconomic factors which affect the availability and access to residential rental houses and units as well as the financial capacity of residential tenants, the Department of Human Settlements and Urban Development has approved National Human Settlements Board (NHSB) Resolution 2023-03, dated Oct. 13, 2023, which regulates rent covering the period of Jan. 1, 2024 to Dec. 31, 2024 for monthly rental rates that do not exceed Ten thousand pesos (P10,000). Said resolution expressly states:

"WHEREFORE, pursuant to the foregoing, the National Human Settlements Board hereby RESOLVES, as it is RESOLVED, to continue the rental regulation for the period January 1, 2024 to December 31, 2024 under the same terms and conditions provided under NHSB Resolution No. 2022-01, that for as long as the unit is occupied by the same lessee, the rent of any residential unit shall not be increased by more than four percent (4%) for the monthly rental rates of P10,000 and below;

"PROVIDED, that when the residential unit becomes vacant, the lessor may set the initial rent for the next lessee, provided that in case of boarding houses, dormitories, rooms, and bed spaces offered for rent to students, no increase in rent more than once a year shall be allowed;"

Taking these tenets into consideration, we submit that one may only increase the monthly rental rate of ones lessee by up to 4 percent if the current rent is not more than P10,000, in consonance with National Human Settlements Board Resolution 2023-03.

If the current rental rate for ones residential apartment is more than P10,000, then one may increase the rent by 7 percent

Source: Manila Times