Joey Bondoc, Colliers head of research, said the oversupply is equivalent to about P130 billion worth of units, which would prompt builders to slow down project launches, especially in the middle income and affordable segments.
Bondoc, a guest speaker at an economic briefing organized by EastWest Bank and Prestige by Filinvest, noted that buyers are staying away due to relatively high mortgage costs.
President Ferdinand Marcos Jr.’s directive to phase out Philippine Offshore Gaming Operators (POGOs) is also significantly impacting demand.
“POGOs have been leaving the Philippines and we do not see another demand driver for the residential sector in Metro Manila. That’s why we’re likely to see tempered demand in Metro Manila,” he said.
So, we just wait for developers to lower prices?
Don’t bet on it, Bondoc said.
“Prices of construction materials are still elevated so it doesn’t make sense to impose a much lower selling price,” he said, adding that wages and land values continue to rise.
Lowering prices could send a “bad signal” that would negatively impact the industry.
“For the residential units to still look attractive [developers] just impose a lower reservation fee, and longer downpayment terms. The longest that we’re seeing in the market is seven years,” Bondoc said.
Moving away from Metro Manila
Bondoc said developers are also tapping opportunities outside the capital to fuel growth while resolving the oversupply issue in Metro Manila.
“We’re seeing the shift to suburbia,” he said.
Other growth drivers are luxury properties, condotels, and other leisure-themed developments.
“When you go to Quezon City, or Pasay, it’s P130,000-150,000 per square meter. You’ll see that [same] developer launching in Batangas where a condotel is P250,000 per square meter and that project is 75 percent sold,” Bondoc said.
“It’s really how you position the project. If it’s leisure-centric, that still appeals to the market,” he added.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.