Construction material prices grew by 1.5 percent in Oct.

Retail prices of construction materials in Metro Manila grew by 1.5 percent in October, slightly higher than the 1.1 percent last year, according to data from the Philippine Statistics Authority (PSA).

On a monthly basis, the construction materials retail price index (CMRPI) was also higher than the 1.2 percent in September.

The PSA cited the increase to the higher annual spike in the heavily weighted tinsmith materials index at 2.3 percent from 1.5 percent in the previous month.

Likewise, three commodity groups posted annual increases in prices in October: carpentry materials at 0.9 percent from 0.7 percent in September; painting materials and related compounds at 2.5 percent from 2.1 percent; and plumbing materials at 1.0 percent from 0.8 percent.

An annual increase was also recorded in the price index of masonry materials at 0.1 percent last month from a 0.1 percent annual decline in September.

On the other hand, a slower annual increase was observed in the index of miscellaneous construction materials at 1.1 percent from 1.5 percent in the previous month.

The index of electrical materials, meanwhile, retained its previous September annual rate of 1.7 percent.

In an earlier report, the PSA said the wholesale price growth of construction materials in NCR slowed down in the same month compared to 2023. The construction materials wholesale price index's (CMWPI) 0.3 percent growth was slower than the 1.4 percent in October 2023.

A primary contributor to the CMWPI uptrend was the faster annual increase in the index of hardware at 0.7 percent in October from 0.5 percent.

Source: Manila Times and PSA

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

Growth in home prices eased in Q2

Home prices in the Philippines rose at a slower pace in the second quarter, as a high interest rate environment tempered demand for housing loans, the Bangko Sentral ng Pilipinas (BSP) reported.

Nationwide costs of various types of new housing units—as measured by the residential real estate price index (RREPI)—went up by 2.7 percent year-on-year in the three months through June, easing from the 6.1 percent annualized increase recorded in the first quarter.

But on a quarter-on-quarter basis, home prices grew slightly faster at 1.8 percent than the 1.1-percent sequential jump recorded in the January-March period.

The RREPI is a measure of the average change in the prices of shelters based on banks’ data on actual mortgage loans granted to acquire new housing units. This quarterly gauge, however, excludes pre-owned or foreclosed properties.

By housing type, condominiums registered the highest year-on-year growth rate at 10.6 percent in the second quarter, followed by a 1.7-percent growth in single-detached/attached houses. Meanwhile, the cost of townhouses contracted by 0.8 percent.

BSP data showed the slower annual increase in prices of new shelters coincided with weak demand for home loans. In the second quarter, the number of housing loans granted by banks contracted by 3.5 percent year-on-year, a reversal from the 8.9-percent increase recorded in the preceding three months.

Quarter-on-quarter, home loans sagged by a bigger 15.1 percent, an indication that the economy continued to absorb the previous anti-inflation interest rate hikes of the BSP.

Easing cycle

Banks use the BSP’s policy rate as a guide when charging interest rates on loans. By making borrowing costs more expensive, the BSP wants to temper strong demand for commodities with limited supply. This, in effect, tames inflation.

But with inflation easing back to within the 2 to 4 percent target range of the central bank, the BSP in August kicked off its easing cycle with a quarter point cut to the policy rate, which is now at 6.25 percent. And Governor Eli Remolona Jr. earlier this week hinted at the possibility of two more reductions to the key rate at the last couple of meetings of the Monetary Board this year.

“The initial rate cut from the BSP and further cuts up to 2025 should result in lower mortgage rates and help resuscitate take up for residential units across the country,” said Joey Bondoc, senior research manager at Colliers Philippines.

Source: Inquirer and Business World