Metro Manila Condo Oversupply to Clear in 8.2

Metro Manila Condo Oversupply to Clear in 8.2 | Daily Tribune

Metro Manila’s condominium market continues to grapple with an unprecedented oversupply, as new data from Colliers Philippines reveals a record surge in unsold units.

As of 2024, the total value of unsold condominium units has reached a staggering P158 billion, up 77 percent from P89.6 billion in 2023. Colliers estimates that, at the current absorption rate, it will take a daunting 8.2 years, or approximately 98 months, for these unsold units to be fully absorbed by the market. This marks a significant increase from the 3.2 years it would have taken in 2023 to clear the inventory.

The rise in unsold units is contributing to Metro Manila’s residential vacancy rate, which has climbed to 23.9 percent. With declining occupancy in the capital, Colliers Philippines director and head of Research Joey Roi Bondoc pointed out that there is now a notable shift in demand, particularly for residential projects outside of Metro Manila.

The shift away from Metro Manila is evident as demand for residential properties in regions outside the capital is on the rise. Areas such as Batangas, Davao and Cebu are emerging as key growth hubs, especially for resort-themed and mid-income projects. These regions are attracting both local and foreign buyers, with some developments already nearing full occupancy. The oversupply in Metro Manila presents an opportunity for developers to diversify their portfolios and capitalize on the strong demand in these provincial markets.

Pre-selling market: Opportunities in upscale and luxury segments

While Metro Manila’s condominium market faces challenges, Colliers sees opportunities in the pre-selling market, particularly in the upscale and luxury segments. These high-end properties continue to attract buyers due to their prime locations in established business districts, such as Makati CBD, Bonifacio Global City, and Ortigas. Colliers highlights that luxury and upscale developments, especially those priced above P12 million, now account for 41 percent of all condominium launches in 2024 — an increase from just 20 percent the previous year.

Given that the unsold inventory is concentrated in mid-income units, developers are advised to focus on launching more expensive residential projects to cater to the continuing demand for upscale living. The steady interest in luxury properties, particularly in Metro Manila’s business districts, remains a positive indicator amidst the broader market challenges.

Colliers Philippines also emphasizes the significant role infrastructure projects play in shaping the future of the real estate sector. Key developments like the Metro Rail Transit Line 4 (MRT-4), MRT-7, and the Taguig City Integrated Terminal Exchange are expected to be pivotal drivers of growth in the real estate market. These public infrastructure projects are set to improve accessibility and connectivity, making suburban and provincial developments more appealing to buyers.

The government’s continued push for infrastructure development, particularly under the “Build, Better, More” program, is also seen as a crucial factor that will boost land values and residential demand. By aligning new projects with the government’s infrastructure plans, developers can capitalize on the enhanced accessibility and potential price appreciation in areas with planned transport upgrades.

Despite the challenges presented by the condominium oversupply, Colliers Philippines remains optimistic about the overall growth of the real estate market. Developers are encouraged to explore geographic diversification, with regional markets showing strong potential. Furthermore, Colliers advises that developers continue to focus on the upscale and luxury segments, where demand remains relatively stable.

For developers with significant RFO inventory, offering curated payment schemes and creative leasing models, such as rent-to-own programs and extended down payment terms, could help address the glut of unsold units. Also, aligning new developments with infrastructure projects can help boost market demand and enhance the attractiveness of both residential and commercial properties.

While Metro Manila’s condominium oversupply remains a pressing concern, the broader Philippine real estate market continues to present opportunities. Regional markets, pre-selling opportunities in the luxury segment and infrastructure-driven growth are all key factors that will shape the future of the sector. By focusing on these areas, developers can position themselves for success in the years to come.