2 weeks ago
9
Special report
MANILA, Philippines — It’s evident that the residential property market has been facing challenging times, especially with the large amount of unsold condominium units on the market, which will take years to sell.
However, times of challenge also give rise to opportunities, in this case, for property buyers who are seeking long-term investments. With the country’s strong economic fundamentals and attractive terms offered by developers, sources in the property development industry say that now is an opportune time to invest in a residential development.
Strong fundamentals
The Philippines is currently displaying sound economic fundamentals, as seen in indicators such as the continued growth in the country’s gross domestic product (GDP) and controlled inflation levels.
In 2024, the Philippine economy grew by 5.6 percent, slightly faster than the 5.5 percent growth in the previous year, making it the second-fastest growing economy in Southeast Asia after Vietnam.
For this year, GDP is expected to grow by six to eight percent, signaling sustained economic expansion.
Diversified professional services firm Colliers Philippines expressed optimism about the continued growth of the economy.
“The sustained pace of economic expansion makes the Philippines one of Southeast Asia’s bright spots. Consumer spending slowed in 2024, but tempered inflation, as well as the implementation of interest rate cuts, should provide a boost to the household expenditure-led Philippine economy. The Philippines should benefit from economic pump-priming activities driven by direct and spillover impacts of election spending this year,” Colliers said in a report.
“Colliers is optimistic that sustained growth in 2025 will continue to help lift the property sector, especially the Metro Manila residential and office segments that continue to reel from the adverse impacts of the pandemic and the POGO exodus,” it said.
Average inflation in the country reached 3.2 percent in 2024, slower than the six percent in the previous year.
Latest data from the Philippine Statistics Authority show that inflation remained at 2.9 percent in January, unchanged from its December level. For this year, inflation is projected to reach 3.5 percent.
“Colliers believes that stable inflation and the further easing of interest rates should positively impact the property market, especially the pre-selling condominium sector, which experienced its lowest launches and take-up on record in 2024,” the firm said.
Stable interest rates
As the Bangko Sentral ng Pilipinas (BSP) maintained its benchmark interest rate at 5.75 percent, this ensures access to affordable financing for homebuyers and investors, property development sources said.
The latest rate cut was delivered by the BSP’s Monetary Board in December, when it slashed policy rates by 25 basis points, bringing key policy rates down to 5.75 percent. In 2024, the BSP cut policy rates by a total of 75 basis points.
Colliers noted that these interest rate cuts are a potential tailwind to the Metro Manila condominium market.
“Lower interest rates should result in lower mortgage rates, and this should complement the promos offered by developers,” Colliers said.
BSP Governor Eli Remolona Jr. recently said that they are likely to implement two 25-basis-point cuts this year, one per semester.
Understanding the market situation
While the oversupply of condominium units, especially ready-for-occupancy (RFO) ones, cannot be denied, sources in the property development industry emphasized that this does not apply to the entire Metro Manila.
They noted that while some areas have an oversupply, most developers still maintain manageable RFO inventory levels in other locations.
This aligns with insights from Colliers showing that not all areas are affected by the excess supply.
“The ready-for-occupancy (RFO) condominium market in Metro Manila continues to face challenges. But while it takes more than eight years to fully absorb the unsold RFO units, it is important to highlight the fact that not all Metro Manila submarkets are affected by the overhang,” Colliers said.
Data from Colliers show that the remaining inventory in Metro Manila stood at 74,400 units as of the end of 2022. About 26,300 of the unsold inventory was classified as RFO projects.
It highlighted that 57 percent of the unsold inventory was located in Quezon City (19 percent), Manila (16 percent), and Parañaque (10 percent).
Additionally, property developer sources noted that big developers with strong balance sheets continue to launch and complete pre-selling projects, ensuring confidence in the market.
Attractive payment schemes
To further attract more buyers, sources said that many developers are offering low down payments, flexible amortization terms, and step-up financing. This makes it easier for both first-time buyers and seasoned investors to acquire properties.
In its recent property market briefing, Colliers said some developers are offering early move-in promos and discounts for their RFO units.
“These include up to 30 percent discount on total contract prices (TCPs) for spot cash payment, rent-to-own promos, extended down payment terms of up to 48 months, and lower lump-sum payments before a buyer can move in,” Colliers said, adding that some developers are also providing free air conditioning units and kitchen appliances.
Continued demand for upscale developments
Cushman & Wakefield director for Research, Consultancy and Advisory Services Claro Cordero Jr. noted earlier that there is still demand for luxury-type developments.
“We’re looking at increased demand for luxury-type developments. It’s really an offshoot of what happened during the pandemic. Buyers are looking for bigger units, more high-quality amenities—the kind only high-end developments can offer. I think one of the main reasons for the depressed market conditions is a supply-demand mismatch,” Cordero said.
Cushman & Wakefield also noted that there is increasing demand across all key Philippine real estate sub-sectors for higher-quality, well-located and resilient developments.
“Investors and tenants prioritize properties in prime locations with superior amenities and robust infrastructure. This helps maintain and even increase property value over time. This stability attracts more investors looking for safe havens, further reinforcing the value of these assets,” Cordero said.
This view aligns with property developer sources who noted that prospective buyers and investors continue to seek quality developments from top-tier developers with solid financial backing and sustainable strategies.
“If you’re an investor, now is an opportune time to consider luxury residential properties,” Santos Knight Frank director of Consultancy Lovelle Taleon said in an earlier email to The Star.
“Demand for this segment remains strong, with an anticipated five percent year-on-year capital appreciation over the next five years. This creates an opportunity to resell the property for higher and quicker returns, offering a more favorable strategy compared to generating rental income,” she added.
Moreover, Taleon said Metro Manila remains the most affordable luxury market compared to other global cities.
“This presents a unique advantage for investors, allowing them to acquire premium properties with strong upside potential while benefiting from a more cost-effective entry point,” Taleon said.
Looking toward long-term investment
Real estate remains a top investment choice for those looking for long-term gains, given its strong potential for capital appreciation. Historically, well-located properties have proven to increase in value over time, providing solid returns.
Additionally, condominiums in prime locations remain highly rentable, with steady demand from young professionals, expats and BPO employees, industry experts said.
Furthermore, property development sources emphasize that real estate serves as a hedge against inflation, appreciating over time while providing portfolio stability compared to stocks or volatile assets.
With the country’s strong economic fundamentals, current attractive payment terms and long-term appreciation potential, now is an opportune time to invest in real estate for those seeking growth and financial security.
