Manila among the most affordable premium office locations among leading cities globally

Manila among the most affordable premium office 2020-Property Finds Asia

PropertyFindsAsia|Manila among the most affordable premium office locations among leading cities globally|Five Southeast Asian cities rank in the world’s top 86 most expensive premium office rental markets according to the fifth edition of JLL’s Premium Office Rent Tracker (PORT)

The report, which compares occupancy costs for premium office buildings across the world’s leading real estate markets, reveals that Manila takes the 66th spot worldwide at $581/sqm—making it one of the most affordable premium office locations among leading global cities and an attractive option for businesses looking for affordable but well-situated office locations.

Makati City and Taguig City lead all markets in Metro Manila in terms of average annual rentals at $431/sqm and $463/sqm, respectively. This is due to solid office demand for both business hubs coming from IT-BPM and corporate occupiers as reflected in the low vacancy rate of 6.2% and 6.3%, respectively. The presence of quality grade stock, strategic location, infrastructure accessibility, and talent agglomeration serve as key advantages of these districts.

Lizanne Tan, JLL Philippines’ Head of Commercial Leasing, said, “Manila continues to enjoy stable demand and growth in the office sector and we think this positive trend will continue to flourish in the coming years as we see more investment in infrastructure and quality office space.”

Singapore holds the 14th spot worldwide, with net effective rents and occupancy costs running US$1,259 per year per square meter. That is slightly more than half the premium rents in Hong Kong’s Central district, the most expensive submarket. 

The rents in the other ranked Southeast Asian cities were considerably less expensive as well, including Ho Chi Minh City (38th, $829/sqm), Jakarta (55th, $646/sqm), Bangkok (77th, $495/sqm), and Kuala Lumpur (85th, $323/sqm).

Technology-rich markets continue to feature heavily among the most expensive markets. The U.S. tech hubs of New York, Silicon Valley, San Francisco and Boston; the European cities of London and Stockholm; and Beijing and Shenzhen all appear among the most costly markets.

Meanwhile, the African hubs of Johannesburg and Nairobi are currently the most affordable markets.

While the banking, financial industry sectors continue to be the major occupiers of premium office space globally, technology firms – in particular, online platforms – are playing a greater role in propelling demand for premium office space. 

Other gateway cities in Southeast Asia, including Jakarta and Ho Chi Minh City, are now competing with Singapore to become the next Silicon Valley. Specifically, their fast-growing tech start-up ecosystems are diverting some of the attention of venture capital and private equity investors from Singapore. They may eventually challenge Singapore for its position as Asia’s investment and innovation hub.   

For more information, download the Premium Office Rent Tracker report here.

Notes: 

 

In this fifth edition of JLL’s Premium Office Rent Tracker (PORT), we compare like-for-like occupation costs across 86 major office markets in 73 cities. 

 

PORT comprises the key elements of occupancy costs – net effective rent, service charges and government tax on rent – all standardised to enable true international comparisons. While only a fraction of a city’s corporate base will pay premium rents, PORT provides a useful barometer of relative costs. 

 

The average total occupancy costs of the five tracked markets in Southeast Asia are as follows: 

 

Market Total occupancy cost (USD, sqm/yr)
14 Singapore $1,259
38 Ho Chi Minh City $829
55 Jakarta $646
66 Manila $581
77 Bangkok $495
85 Kuala Lumpur $323