Fort Bonifacio’s enduring appeal
Property firms need to be more innovative with their projects. Given the evolving preferences of Filipino investors and the gargantuan need to reignite end-users’ interest, building a stand-alone office building, residential tower, or mall just won’t suffice.
Colliers believes firms need to be more strategic with their latest projects to stand out in a fiercely competitive real estate market that is definitely benefiting from a recovering Philippine economy and growing interest from foreign developers, including Japanese firms. Over the past few years we have seen the integration of more property technology (proptech) into developers’ residential projects as well as the infusion of sustainability features.
Among business hubs in Metro Manila, Fort Bonifacio is one of those that stands out because of its live-work-play-shop concept. This is a key business district in Metro Manila that continues to corner major office leasing deals and interest from foreign office occupants and residential developers. The business hub’s retail scene is also bustling, offering a myriad of Filipino and foreign brands as well as retail centers with expansive leasable spaces.
The development of major infrastructure including the BGC-Ortigas link bridge made Fort Bonifacio more accessible, especially for commuters coming from Ortigas Center. Meanwhile, the completion of the Metro Manila subway in 2029 will further stoke the business district’s stature as a preferred location for Filipino and foreign investors and developers.
Largest residential stock in Metro Manila
As of Q1 2024, Fort Bonifacio remains the largest residential hub in Metro Manila, with condominium stock reaching 43,370 units. Colliers expects the annual average completion of 1,200 units in the submarket from 2024 to 2026, bringing its total stock to more than 46,000 units by end-2026.
The business district features a mix of upscale to ultra luxury residential projects, with some developments featuring foreign design and architecture.
Residential leasing picking up
Colliers has recorded rents recovering by almost 6 percent in Fort Bonifacio from 2022 to 2023, after a combined rental correction of 9.7 percent from 2020 to 2021. This is partly due to lower vacancy brought about by an improvement in residential leasing from local employees and returning expatriates.
Colliers has observed that expat residential leasing is picking up in Fort Bonifacio as well as Makati CBD, Rockwell Center, and Ortigas Center. Demand is led by those working for outsourcing companies, shared service centers, multilateral aid agencies, as well as logistics and manufacturing industries. In Fort Bonifacio, demand is also driven by expatriates looking for bigger units that are near offices, international schools, and malls.
Luxury as most attractive price segment
The share of upscale to luxury residential projects (starting at P12 million a unit) to total pre-selling take up in Metro Manila increased to 18 percent in 2023 from 10 percent in 2022. We attribute this to the rising share of higher-priced condominium units to total launches in the pre-selling market in 2023.
Demand was driven by projects located in major central business districts (CBDs) including Fort Bonifacio. In 2023, the luxury market emerged as the most attractive segment in Fort Bonifacio, accounting for more than 90 percent of total take-up in the sublocation during the period.
More joint ventures for luxury projects
In our view, developers planning to launch projects within the upscale to luxury price band should consider joint venture (JV) deals either with local players or foreign developers. We have seen developers implementing this strategy as they attempt to push their pre-selling residential prices higher. These partnerships should be beneficial to property firms with limited landbank as well as to those that intend to offer upscale to luxury and even ultra-luxury residential projects.
Joint venture luxury projects located in Fort Bonifacio include The Seasons Residences by Sunshine Fort North Bonifacio Realty Development Corporation (a JV between Federal Land and Nomura Real Estate), and Grand Hyatt Residences by North Bonifacio Landmark Realty & Development (a JV between Federal Land and ORIX Corp.).
As of Q1 2024, Colliers data showed that these projects have high take-up rates, ranging from 96 percent and 100 percent, respectively, while having average price per sqm of between P299,000 and P387,000 ($5,340 and $6,900). This only shows that while these projects are some of the most expensive in the business district, they continue to capture the interest of affluent and discerning buyers.
Healthy office space takeup
Office vacancy in Fort Bonifacio stood at 15.4 percent as of Q1 2024. This is lower than the Metro Manila-wide vacancy of 19 percent during the period. Maintaining healthy office vacancy is important as this will help ensure that developers will be able to command premium rents and the business district remains isolated from the massive rental correction experienced by other major business hubs in Metro Manila.
Fort Bonifacio enjoys a healthy level of vacancy despite having the second largest office supply in Metro Manila with about 2.6 million sqm of office space, next to Makati CBD’s 3.3 million sqm. From 2024 to 2026, we project the annual delivery of about 46,000 sqm of new office space in Fort Bonifacio. This only means that the business district can accommodate more outsourcing and traditional office tenants, which also help drive demand for residential units within the business district.
Over the past few quarters, we have seen large and high-profile outsourcing and multinational corporations occupying office space in the business district, and we see this chipping in to greater residential takeup (whether for sale or for lease) in Fort Bonifacio for the remainder of the year.
For feedback, email joey.bondoc@colliers.com
