Metro Manila’s residential rental market faces a period of stability, but not significant growth, heading into 2026. Experts predict rental yields will remain largely unchanged, a consequence of cautious investor interest and a persistent surplus of condominium units.
Certain key districts are showing signs of recovery, however. Rents in Bonifacio Global City and Taguig have already surpassed pre-pandemic levels, indicating a localized rebound. The challenge lies in extending this momentum to other areas still grappling with discounted rates and excess supply.
The current demand is primarily driven by individuals seeking homes, not investors looking for returns. This shift explains the effectiveness of developer promotions for move-in ready properties, catering directly to end-users rather than speculative buyers.
Across the primary market – new properties sold directly by developers – average rental yields currently stand at 4.1%. The secondary market, encompassing pre-owned units offered by individual owners, fares slightly better at 4.8%.
This difference in yield stems from the fact that secondary market sellers often acquired their units at lower prices initially. This allows them to offer more competitive rental rates and achieve higher returns.
A significant oversupply continues to weigh on the market, with over 30,400 unsold condominium units currently available. This represents roughly eight years’ worth of inventory, creating downward pressure on prices and yields.
The majority of this surplus falls within the affordable to lower-middle income range, with units typically priced between P2.5 million and P6.99 million. High condominium prices, coupled with modest rental income, contribute to the lackluster yields.
To revitalize the market, a period of price stabilization is needed. While widespread price reductions aren’t anticipated, allowing rents to catch up to current values is crucial for improving returns.
Overall, experts anticipate rental yields to remain within the 4% to 6% range. Factors like potential interest rate reductions, the return to office work, and the continued presence of expatriates and students could provide a modest boost to rental demand.
Developers are urged to adopt a more strategic approach to launching new projects, carefully aligning supply with genuine demand. Proactive maintenance and targeted marketing efforts are also essential for attracting tenants to existing, unsold units.
A more disciplined approach to supply, coupled with a focus on end-user and rental needs, is expected to strengthen pricing power in the medium term. Vacancy rates are projected to ease slightly, dropping from 26.5% at the end of 2025 to 26% in 2026, as developers moderate the pace of new launches.
