1 month ago
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Last year was not a very good one for the Philippine real estate sector as it saw land values declining in Metro Manila’s central business districts while the condominium supply glut grew to 8.2 years of inventory from 3.2 years in 2023.
During the Colliers fourth quarter Property Briefing, Colliers Philippines Research Director Joey Roi Bondoc said the value of ready-for-occupancy units have surged by 77 percent to P158.2 billion last year from P89.6 billion in 2023.
Of this amount, the biggest share of 35 percent is accounted for by the lower mid-income segment (P3.6 million to P6.99 million), followed by the upper mid-income segment (P7 million to P11.99 million) at 25 percent, and the affordable segment (P2.5 million to P3.59 million) at 23 percent.
In contrast, the upscale (P12 million to P19.99 million) and luxury (P20 million and above) segments are still enjoying brisk sales and account only for a combined five percent of RFO units.
Most of the unsold units are in Quezon City, Manila, Pasig, and Parañaque which account for a combined 57 percent of RFO units while central business districts of Makati, Ortigas, Rockwell and Fort Bonifacio almost have no RFO units available.
Bondoc said the oversupply is due to the rise in prices of condominiums, slower growth in income and remittances, elevated mortgage rates, and the exodus of Philippine Offshore Gaming Operators (POGOs).
The reason for the rise in condominium prices has been attributed to high land values, elevated interest and mortgage rates, and the surge in the prices of construction materials.
On the other hand, he noted that, “if you look at condo prices, the increase was at 14 percent annually from 2018 up to 2023. If you look at the average annual salary increase, it only grew by five percent during that period.”
Meanwhile, residential vacancy (leasing) is at an all-time high of 23.9 percent due to the POGO exit with the Bay area having a vacancy rate of 52 percent.
While vacancy rate is seen to dip slightly in Ortigas, Makati, Eastwood, and Rockwell in the first quarter of 2025, Bondoc said Bay Area vacancy is seen to rise to 54 percent while Fort Bonifacio will see a small uptick to 19.6 percent from 19.5 percent.
Because of this, residential rental rates are seen going down by 1.5 percent in the first quarter from the 0.3 percent correction in the fourth quarter last year.
“But you know, in the condominium sector in Metro Manila, it’s not all doom and gloom,” he said, citing that there are factors that can contribute to the recovery of the market such as the country’s fast economic growth.
Bondoc added that “interest rates have been declining, developers continue to offer attractive promos and discounts” such as low downpayments, extended payment terms, as well as free appliances and internet.
Also seen boosting sales is the coming mid-term elections, government’s infrastructure building program, and the sustained flow of remittances.
