Colliers Philippines expects substantial demand for residential properties from middle-income customers by the first half of next year following another policy rate cut by the Bangko Sentral ng Pilipinas (BSP).

“We’ll probably see the full effect of the 25- basis point cut by the BSP by mid-2025. Due to high interest rates, developers are not launching more mid-income projects,” Colliers Philippines director of research Joey Bondoc said Tuesday night in an economic and real estate briefing organized by EastWest Bank and held at Solaire Resort, Quezon City.

Economists had been projecting a reduced policy rate by the BSP. On Wednesday, the BSP indeed eased its rate by another 25 basis points to 6 percent.

Bondoc said the country’s average mortgage rate has been high at 8.2 percent, discouraging most middle-income earners from buying real estate.

Their tepid appetite for property, he said, has been evidenced by a huge volume of unsold ready-for-occupancy (RFO) condominium units in Metro Manila.

“It will take five years for unsold RFO units to be fully absorbed by the mid-income segment. These are 21,000 units or P130 billion in inventory,” Bondoc said.

He added two out of three unsold RFO units have been marketed to middle-income earners, including overseas Filipino workers (OFWs).

As a result, he said most developers have not launched new projects catering to middle-income customers who usually prefer residences valued at P3 to P6 million.

Instead, Bondoc said nearly 60 percent of new launches consisted of upscale or luxury projects.

POGO effect

While OFWs can earn more in pesos to buy real estate, Bondoc said their opportunities for property rental income have been greatly diminished due to the government ban on Philippine offshore gaming operators (POGOs).

“Developers are still wary. For example, some developers told OFW investors that if they buy now, they can lease the property as AirBnB or to POGO workers. Now, developers can no longer promise that,” he said.