The worsening traffic condition in Metro Manila has pushed young professionals to scout for living spaces closer to their workplaces. This is according to a recent report by Cushman & Wakefield.
With expensive condominium rents in central business districts, the report shows that individuals on a budget turn to the fringe areas for affordable housing options. These typically come in the form of dormitories and boarding houses. Developers have noted the rising need for reasonably-priced lodging while also acknowledging their tenants’ desire for a more sophisticated offering. This paved the way for the growing footprint of professionalized dormitories, often termed “dormitel” for the hotel-like amenities and property management services these projects offer.
In the CBD markets of Bonifacio Global City (BGC) and Makati City alone, there are about 1,400 beds currently being leased out by existing dormitel developments. The reception to these projects are positive, with buildings typically reaching 100 percent occupancy within two months of operations. Developers are optimistic about the business, coming up with an aggressive pipeline bringing the total number of beds to more than 10,000 by 2019.
With average monthly rates registering at PHP 4,525 (USD 86.85) per person for shared rooms, dormitel offerings appear most attractive to young professionals in the IT-BPM and banking sectors with ages from 25 to 35 years old, typically earning PHP 25,000 (USD 480) per month.
The dormitel business proved to be a striking venture for large developers as well. Last year, SM Investment Corporation acquired a 61.2 percent stake in Philippine Urban Living Solutions, the company behind the MyTown brand. Meanwhile, Ayala Land has announced their entry into the market with the launch of The Flats at BGC 5th Avenue, a 1,500-bed dormitory set for operations by 2019.
To get more insights on the Metro Manila dormitory market, read Living in Smaller Spaces: How Developers Reinvent the Dormitory Business.