‘Condo prices in NCR need correction’

MANILA, Philippines — Real estate developers may have to bring down condominium prices to address the oversupply in residential units in Metro Manila, as buyers are opting to invest in cheaper houses in surrounding provinces.

Property expert KMC Savills Inc. believes condo prices in Metro Manila have to be corrected for developers to somewhat monetize the unsold units in their inventories.

As of 2024, Metro Manila is swamped with 37,800 units waiting to be bought, half of which are in the price range of P3 million to P7 million.

At this rate, consumers have to pay as much as P40,000 monthly for a mortgage, forcing them to consider other options outside of Metro Manila. In provinces like Bulacan and Cavite, buyers can already find four-bedroom houses below the P5-million level.

Joshua de Las Alas, director for research, consultancy and valuations at KMC Savills, said developers might have to correct prices, without compromising margins, to resolve the oversupply.

He warned that units would remain unsold if the rates were kept.

Currently, condo prices in Metro Manila average P217,000 per square meter (sqm), and they are highest in Makati (P364,000), Parañaque (P286,000) and Taguig (P275,000).

He said these rates are difficult to settle for middle-income families who earn P50,000 a month, as they would have to allocate at least half of their budgets to pay the mortgage.

Likewise, he pointed out that most of the condos in Metro Manila were made for foreign workers of Philippine offshore gaming operators, and now the units were left vacant as a result of the government ban on POGOs.

As for other property assets, offices are holding strong with a net absorption of 282,600 sqm last year. The largest office occupant remains to be the information technology and business process management industry, taking up 42 percent.

However, KMC Savills COO Cha Carbonell said vacancy rates would stay above 20 percent for most markets as a consequence of the POGO exodus. The hardest hit districts are Bay Area and Alabang, where vacancies are expected to exceed 30 percent this year.

If there is a property sector expanding, KMC Savills senior director for investments Quirino Teo said it is in industrial and warehousing, lifted by the expansion of the logistics market.

To date, logistics holds the largest warehousing space at 46 percent in provinces close to Metro Manila, followed by electronics (24 percent) and fast-moving consumer goods (11 percent).