What happens when the rental of a property rises 150% within 2 years? Fortunately, this is not Malaysia. If it is, the beneficiaries are the owners who got such properties but this is not healthy for the market as a whole because the rental is rising way too fast! This is commercial property which meant that the major reason for the sudden rise must be due to sudden surge in demand and the inability of supply to keep up plus the excess supply of commercial properties are not available. Do read the article below and please pay attention to this sentence too, “Office rents in the Manila Bay area, which has the highest concentration of POGOs, have risen as much as 150% over the past two years, Andaya said, comparable to rents in Makati.”
Article in thestar.com.my here. Rental in a Manila suburb was rising and someone just rented out their place for three times the typical rates. It was rented out to 20 Chinese nationals. Many Filipino landlords are welcoming the surging number of Chinese coming to Manila to work in online gaming companies taking sports and casino bets. Currently, the Chinese gaming firms are capitalising on the Philippines’ liberal gaming environment and an insatiable appetite for gambling in China, which forbids all types of betting. The number of Chinese work permit holders nearly quadrupled in two years to 109,222 in 2018.
The reason is best explained by Dom Fredrick Andaya the director in Coilliers International Philippines, “POGOs came in and saved the office market.” He added, “We would have had double-digit vacancy rates by 2017 if POGOs did not come.” Andaya shared that office rents in the Manila Bay area, which has the highest concentration of POGOs, have risen as much as 150% over the past two years, Andaya said, comparable to rents in Makati. Due to the surge in demand for residential space, the condominium and housing rents have risen as much as 50% in areas where POGOs operate. Article in thestar.com.my here.
As a Malaysian, I would prefer the property rental / prices to be well under control. It should rise definitely but 50% within 2 years? Or 150% for commercial space within 2 years? What happens when these prices happen is that land prices will rise and when developers buy those land to develop, they will also have to price it high. Suddenly, property prices has risen way faster than the household income which definitely does not rise even anything near 50% over 2 years. My dear government, please keep watching and keep learning to ensure that it does not happen in Malaysia yeah. Happy reading.
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