At the current sales pace, it will take 8.2 years to clear the inventory, which is largely in the mid-priced segment (P3.6 million to below P12 million), Colliers research director Joey Bondoc said during a briefing with media and analysts on Wednesday.
This is much wider than the previous estimate of almost six years—which was amplified by the exodus of Philippine Offshore Gaming Operators, or POGOs, but Bondoc said “take-up did not improve significantly” by the end of last year.
In fact, just 9,000 units were sold last year against the addition of another 11,000 units, both record lows, he said.
Not all segments affected
For example, the high-end segment has been doing “relatively well.”
“They only cover about 5 percent of the unsold part of the market in Metro Manila right now,” Bondoc said.
Pay attention to location
Data from Colliers showed that Quezon City, Manila, Pasig, and Parañaque cover about 57 percent of total unsold ready-for-occupancy units.
“But I want to highlight here that the other, more established business districts, are in fact doing better. So, I’m talking about Rockwell, Ortigas Center, Fort Bonifacio, and of course, Makati CBD,” he said.
Pre-selling gap vs secondary market units
The inventory overhang is also resulting in competition between new units and those being sold in the secondary market.
Bondoc said pre-selling units in Rockwell are priced at P550,000 per square meter, while secondary market are at a significant discount at P290,000 per square meter.
It’s the same case in areas like the Makati central business district, where the pre-selling to secondary market gap stands at P267,000 to P400,000 per sqm.
Bondoc said this is because pre-selling prices are controlled by the developer while those in the secondary market are influenced by market forces such supply and demand.
It’s not so easy to simply drop prices
Apart from the negative signal a drastic price cut sends to the market, Bondoc said construction costs, especially for high-rise towers, have been increasing.
“There was a 14-percent increase from 2018 to 2023,” he said.
On top of this, the rise of POGOs helped drive up property prices, but incomes failed to grow at the same pace, Bondoc added.
Big opportunity: the OFW market
“There is a low-hanging fruit here, and that applies to the [overseas Filipino worker] remittances,” he said.
This is validated by Colliers data showing that OFWs were allocating 12.7 percent of their remittances to real estate, its highest level since 2016.
Other bright spots
“It’s not all doom and gloom. So you have the Philippines still recording one of the fastest [gross domestic product] expansions in the region,” Bondoc said.
“Interest rates have been declining. Again, developers continue to offer attractive promos. You now see more leisure-oriented developments being launched and completed outside of Metro Manila. Infrastructure is very important,” he said.
“As we always say, major infrastructure projects will unlock land and property values,” he added.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.