In our view the interest rate cuts are a potential tailwind to the Metro Manila condominium market. Lower interest rates should result in lower mortgage rates, and these should complement the promos offered by developers.
Colliers Manila
The ready-for-occupancy (RFO) condominium market in Metro Manila faces significant challenges, with the unsold units expected to take more than eight years to be fully absorbed, based on the latest report from Colliers Philippines.
As of end-2024, the remaining inventory in Metro Manila stood at 74,400 units worth P158 billion. Of the total, 26,300 are classified as RFO project.
Despite this, Colliers Philippines said not all submarkets in Metro Manila are experiencing the same level of oversupply as the luxury residential market remains strong.
To address the oversupply problem, Colliers Philippines said developers should actively offer more attractive payment terms for both pre-selling and RFO projects.
“In our view the interest rate cuts are a potential tailwind to the Metro Manila condominium market. Lower interest rates should result in lower mortgage rates, and these should complement the promos offered by developers,” Colliers Philippines said.
Need to diversify
Colliers Philippines believes that geographic diversification is key to addressing the oversupply in Metro Manila.
It said resort-themed projects in areas like Batangas, Benguet, Davao and Cebu continue to perform well, and some mid-income vertical projects outside Metro Manila are nearly sold out.
It also highlights the importance of proximity to upcoming infrastructure projects such as the Metro Manila subway in driving demand. These large-scale public projects are expected to increase the attractiveness of properties in Metro Manila particularly as these developments are completed in 2024 and beyond.
In 2024, the pre-selling market in Metro Manila recorded only 9,100 condominium unit take-up, a significant drop from the previous years
Despite a slowdown in the overall market, Colliers said that luxury and upscale segments are still seeing some interest, as developers respond to high land values and rising construction costs. This has led to an increase in the launch of more expensive units.
Mid-income market
Majority of unsold RFO inventory remains in the mid-income segment, which continues to account for a large portion of the market. The developments are priced between P3.6 million to P12 million.
As a result, vacancy rates in Metro Manila reached an all-time high of 23.9 percent in 2024, largely due to the exodus of Chinese employees following the government’s POGO ban. Colliers Philippines expects vacancy rates to remain elevated through 2025, which will likely continue to pressure rental and price growth.
Rents are expected to decrease by 1 percent to 1.5 percent in 2025.
