Condo market slows down on glut concerns

CEBU, Philippines - Colliers International Philippines says Cebu’s condo market may not be as good as it seems as a significant slowdown has been perceived over concerns of a possible glut.

Julius Guevara, director for research and advisory at Colliers, said oversupply worries led developers to pull back the launches of their projects.

"The [condo] market has been slowing down because there's just so much out there that people could choose from," Guevara said in an interview at the sidelines of the Cebu Housing Summit Wednesday.

In his report at the summit, Guevara noted the number of condo units launched in Cebu has declined this year.

As of the first half in 2015, a total of 2,200 condo units were launched and 2,100 of which were sold compared to the 6,400 units launched and 4,900 units sold in whole 2014.

"The slowdown in the condo market is apparent," Guevara said. "In 2015 there was really a drop [in launches]."

"Developers are aware of this and this pulled back their launches," he added.

The official said condo sales in Cebu may reach somewhere 4,000 units in 2015, lower than the 2014 sales which reached close to 5,000 units.

He said most investors are in the "wait and see" mode for new developments to be finished before they make their next purchase.

"I highly suggest the Cebu developers to take a very good look at the market," Guevara told the Cebu real estate industry.

Colliers' report seems contrary to developers' belief that the market is still robust.

According to Guevara, the housing demand that most developers usually refer to is actually the one coming from those who can't afford house financing.

He instead urged developers to consider developing mass houses to capture this market.

The research head further explained the growth in the horizontal segment is still visible particularly in areas with real end-user demand.

"Leisure properties with a yield component would be a viable alternative to investors," he added. (FREEMAN)