Now Reading
Metro Manila condo market remains resilient, adaptable
Dark Light

Metro Manila condo market remains resilient, adaptable

Janlo de los Reyes

The current supply in Metro Manila’s residential condominium market is outpacing demand.

There are several factors to this. First is the exit of Chinese investors. Prior to the pandemic, we saw a surge in Chinese buyers in the country owing to warmer ties with China and rise of Philippine offshore gaming operators (POGOs). However, there has been a demand pullback from this segment due to the clamp down on POGO operations by the government followed by their total ban in the country.

Second is the elevated cancellation rates of condominium units among developers. We’re seeing a substantial number of returned units as some buyers are unable to sustain payments. While buyers are able to pay for the downpayment, some are not qualified to take out loans—thus unable to pay for the remaining balance.

Lastly is the shift in preferences by buyers to purchase horizontal housing in urban areas outside Metro Manila during the pandemic.

Prices between a house and lot (H&L) in suburban areas and a condominium in the metro are comparable, making the former an attractive purchase for buyers especially when considering the land ownership, size of the space, and sense of community, among others.

These residential subdivisions also have good infrastructure connectivity to Metro Manila, making the tradeoff between distance and travel time acceptable to buyers.

CONTRIBUTED PHOTO

Uneven performance

To clarify, this situation is not across the board, as some developers, locations, and market segments are still exhibiting resiliency despite the current landscape.

The upscale and luxury segments continue to register relatively good sales take-up and stable pricing particularly in core markets such as the Makati central business district and Bonifacio Global City (BGC). These two districts recorded a compounded annual growth rate of roughly 11 percent from Q4 2021 to Q4 2024.

The middle market is where we’re seeing challenges, as areas in Pasay City and Parañaque City are seeing an increase in returned units.

Moderate price increases

Despite the uneven performance, we still see moderate price increases in the residential condominium market, behind sustained demand in select areas. This is also influenced by higher costs, underpinned by relatively high interest rates, leading to higher borrowing costs and inflation rates pulling up prices of materials and labor—thus resulting in more expensive construction costs for developers.

To help soften the increase in prices, developers have been aggressive with their offered payment terms. Developers are offering promos such as discounts and stretching payment terms to at least 40 to 50 months, some even longer, (depending on turnover date) to make it easier for buyers to purchase condominium units.

See Also

MJSCONSTRUCTIONGROUP.COM.AU

Remaining resilient, adaptable

Looking ahead, we project the landscape to stabilize as we’re expecting developers to be strategic with their launches, holding off on new projects as take-up improves and the current inventory is absorbed by the market.

We expect developers to implement stricter pre-qualification process to properly assess buyers and their capacity to purchase. Aggressive payment terms are also anticipated to continue to help support and attract buyers.

We may also see opportunities to shift to other asset classes, such as hotels and hospitality, which are seeing significant growth.

With these changes, we expect the Metro Manila condominium market to remain resilient and adaptable despite the challenges posed by the oversupply.

The author is the head of Research at JLL Philippines. 

View Comments (0)

Leave a Reply

Your email address will not be published.

Have problems with your subscription? Contact us via
Email: plus@inquirer.com.ph, subscription@inquirer.com.ph
Landine: (02) 8896-6000
SMS/Viber: 0908-8966000, 0919-0838000

© The Philippine Daily Inquirer, Inc.
All Rights Reserved.

Scroll To Top