Metro Manila condo launches fell to lowest level in 5 years

New condominium launches in Metro Manila slumped to a five-year low in the first quarter, as property developers focus on clearing their existing inventory, according to property consultancy firm Leechiu Property Consultants (LPC).

LPC’s latest Philippine Property Market Report showed new condominium launches in Metro Manila plunged by 77% to 1,347 units in the January-to-March period from 5,928 units in the fourth quarter of 2024.

This was also the lowest number of units launched since the 9,392 units in the first quarter of 2020 when the coronavirus disease 2019 (COVID-19) pandemic began.

In a statement, LPC said developers are “focusing on marketing existing inventory, particularly within the midrange segment, before rolling out new projects.”

Leechiu Director for Research and Consultancy Roy Amado L. Golez, Jr. said the drop in new residential condominium projects reflects developers’ lack of confidence in the market.

“The significant number of supply in the market dictates that developers will slow down their launches. But then at the end of the year, we’ll likely see the same blip upwards in terms of total supply,” he said at a media briefing.

LPC data showed a 14% quarter-on-quarter improvement in sales take-up with 6,500 units sold in the first quarter, amid rate cuts by the central bank. However, this was a far cry from the 13,246 units sold in the first quarter of 2020.

The Bangko Sentral ng Pilipinas (BSP) cut rates by 75 basis points in 2024, bringing the key rate to 5.75%. The BSP has signaled it will continue easing this year.

“We’ve seen a good start for the year for the residential market. But we need to move with caution for now due to very recent developments in the world capital markets. For developers, they will need to be more aggressive with their marketing: their promos and payment terms,” Mr. Golez said.

Mr. Golez said buyers should take advantage of “a short window of opportunity to acquire property at favorable terms while supply is not yet at comfortable levels.”

Metro Manila still has an oversupply of condominiums, mainly in the mid-market to upscale segments and in areas outside central business districts that were affected by the government’s ban on Philippine offshore gaming operators (POGO).

As of end-March, LPC data showed Metro Manila had about 81,400 available condo units, which may take 38 months or about three years to be fully sold.

“Most developers, or practically all, are reluctant to decrease prices. But in effect, what they’re trying to do is offer decreased prices by offering discounts as well as extended payment terms,” Mr. Golez said.

Mr. Golez said he expects developers to limit their project launches for the next six months.

“In the next six months, I think these (launches) will remain low, but as take-up improves, I think they will recover, because now, there are only limited launches,” he told BusinessWorld after the briefing.

Meanwhile, the office market saw a 7% year-on-year increase in demand of 355,000 square meters (sq.m.) despite the absence of POGOs and limited government take-up, LPC said.

“The main difference between this quarter and the first quarter of 2024 is the 56% increase in BPO (business process outsourcing) demand coming from specifically one segment, which are the global in-house centers,” Mikko Baranda, LPC director for commercial leasing, told the briefing.

Global in-house centers are involved in healthcare, banking, financial services, and insurance sectors.

“A lot of these companies, and probably also predicated with what’s happening all over the world, are looking at the Philippines again to offshore and outsource work,” Mr. Baranda said, citing foreign companies like JPMorgan keen on growing their footprint in the country.

In the first quarter, lease transactions involving IT-BPOs reached 185,000 sq.m. of office space, while those for traditional offices reached 94,000 sq.m.

The nationwide office vacancy rate stood at 17% in the first quarter. In Metro Manila, the office vacancy rate stood at 16% — with the highest in Taguig at 24% and the lowest in Bonifacio Global City (10%).

For 2025, office net take-up is expected to jump by an annual 16% to 490,000 sq.m.

“The office market in the Philippines continues to show grit in the face of global and local challenges. The IT-BPM sector remains to be a reliable key driver of growth, while traditional office tenants are also increasingly active. With a promising outlook for the rest of the year, we expect resiliency amidst potential headwinds,” Mr. Baranda said.

LPC said a total of 2 million sq.m. is forecast to be added to the Philippine office supply in the next four years.

Meanwhile, the country’s retail market has already recovered from the pandemic.

“The general population has largely come back to the malls, and back to their consumption behavior. Developers are largely confident of the market with 105 malls upcoming nationwide [in the next six years],” Mr. Golez said. 

By developer, SM Prime Holdings, Inc. accounted for 29% of upcoming malls, followed by Robinsons Land Corp. at 28%, and DoubleDragon Corp. at 15%. Other developers expected to launch new malls in the six-year period include Ayala Land, Inc. (10%), Megaworld Corp. (7%), and Rockwell Land Corp. (2%).

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Source: Manila Times

Infrastructure delays may disrupt developers’ plans beyond Metro Manila

Further delays in mass transport projects may complicate property developers’ expansion plans outside the National Capital Region (NCR), as improved connectivity is a key factor in unlocking new growth areas, analysts said.

“One way to temper the lackluster demand in Metro Manila is to be more aggressive in expanding outside the capital region; developers are also hinging their expansion on these infrastructure projects,” Joey Roi H. Bondoc, director and head of research at Colliers Philippines, said.

“These delays will likely stall the development strategies of developers outside Metro Manila,” he added.

Among the causes of delays in major mass transport projects are right-of-way (RoW) issues, budget constraints, and procurement and technical challenges.

“Infrastructure project delays may affect the credibility of the National Government in delivering economy-enhancing projects, which, in turn, could indirectly negate investor appetite for the Philippines,” Havitas Properties President and Chief Executive Officer Jonathan F. Caro said.

For instance, delays in the North–South Commuter Railway (NSCR) could affect key developments outside Metro Manila.

The Department of Transportation recently established a Flagship Project Management Office to accelerate the implementation of key mass transportation projects, including addressing RoW challenges.

Big-ticket projects under its monitoring include the NSCR, the Metro Manila Subway Project, the EDSA Busway Project, the EDSA Greenways Project, the Cebu Bus Rapid Transit, and the Davao Public Transport Modernization Project.

Both investor and buyer confidence rely on the timely delivery of public infrastructure projects, said Spike Alphonsus Ching, project director at PH1 World Developers.

“Delays or unmet expectations could erode confidence, particularly for developments meant to benefit from these projects. However, once these projects are completed, we expect a positive impact on the market, as enhanced connectivity unlocks new growth opportunities for both investors and property owners,” he said.

Delays in mass transport projects could also affect the development of luxury properties, which are primarily located outside the capital region.

“You can’t live there if you can’t get there,” Bill Barnett, executive director of Thailand-based hospitality consulting group C9 Hotelworks, said.

Mr. Barnett added that mass transportation infrastructure is necessary to further develop metropolitan areas in the countryside.

“For luxury real estate like branded residences, there is strong opportunity outside traditional areas like Makati, BGC (Bonifacio Global City), and the Bay Area, but the catalyst for change has to be a large-scale commitment to mass transport,” he also said.

Source: Business World

The cyclical nature of the property sector

Over the last few weeks, discussions surrounding Metro Manila’s condominium sector have taken on a more cautious tone.

Concerns over a reported oversupply and extended absorption periods—owing to elevated interest rates and the exit of Philippine offshore gaming operators, among other factors—have prompted questions on the real state and health of this industry.

A necessary recalibration

Another perspective, however, explains the current situation as a “necessary recalibration”—one that steers the market away from speculation and toward long term sustainability.

After years of rapid expansion especially before the pandemic, this shift now offers an opportunity to reshape Metro Manila’s condominium landscape into one that is more resilient, more demand-driven, and more aligned with real end-user needs.

“Metro Manila’s condo oversupply signals a maturing and stabilizing real estate market. Increased competition is driving developers to prioritize quality, innovation, and differentiation. Rather than a setback, this oversupply acts as a natural filter, eliminating weaker projects and raising industry standards,” said Prof. Enrique M. Soriano III, executive director of W+B Advisory Group.

The current landscape, in fact, presents a number of silver linings: developers are enhancing their offerings, buyers are getting better and more attuned options, and investors are finding new opportunities in a market that is moving toward a more balanced environment.

In a real estate cycle, downturns are not roadblocks but are “resets”. And those who understand the nuances of this transition will be best positioned to thrive in the market’s next phase.

Emerging districts like Bridgetowne are expected to see sustained demand in premium residential space.

Long term value

Amid this scenario, developers are now “moving away from speculative projects and toward sustainable, mixed-use, and community-driven developments that emphasize long term value,” Soriano said.

At the same time, high-net-worth individuals, affluent empty nesters, and discerning buyers are also increasingly favoring well-located, low density, and amenity-rich developments.

This highlights the continued demand for premium properties in key business districts like Makati CBD, Bonifacio Global City (BGC), Ortigas Center and Cebu City, as well as emerging districts like Bridgetowne and Parklinks—while reinforcing the notion that prime-location investments remain among the safest bets.

Janlo delos Reyes, head of Research and Strategic Consulting at JLL Philippines, concurs, pointing out that such markets—Makati CBD and BGC—are well ahead in terms of market maturity.

“These two districts have continued to register solid take-up and stable price growth despite current market conditions,” he said, adding that other areas in the metro, which recorded periods of significant growth in the past, may still be considered as maturing.

“Nonetheless, we can expect the situation to stabilize over the long run,” delos Reyes added.

No signs of panic, just patience

Sheila Lobien, CEO of Lobien Realty Group Inc., meanwhile assured that they haven’t observed prevalent “speculative behavior” in the market.

“We sense no widespread panic among developers and those who have condo mortgages. There is no flood of second-hand condos for sale, increase in real estate non-performing loans (NPLs) or surge in repossessed condo inventory for sale in the market,” she explained.

The situation is thus unlike overheated markets, where investors offload properties en masse at the first sign of trouble.

Lobien even waxed optimistic in saying that demand is expected to “recover once benchmark rates are possibly down to 5 percent, which is expected this year or early next year. Recovery in demand is just a matter of time.”

Major CBDs are seen to continue thriving.

From oversupply to opportunity

Similarly, another expert stressed that the perception of an oversupply overlooks a crucial point: that the Philippine real estate market is no longer driven purely by speculative investments but by strategic, end-user-oriented growth.

Andoy Beltran, VP and head of Business Development at First Metro Securities Brokerage Corp., said this is a sign of a more disciplined market.

Beltran explained that in a maturing market, sustainable price growth and rental yield stability take precedence over rapid boom-and-bust cycles.

“A maturing market is characterized by developers responding more strategically to demand rather than building just for the sake of launching. The current supply situation indicates a shift from speculative development to data-driven, end-user-focused projects. This means inventory is better aligned with real demand, reducing the risk of oversupply-driven price crashes,” he said.

Instead of viewing the present inventory levels as problematic, seasoned investors and developers should recognize this as a cycle in which strategic positioning and patience will ultimately yield long term gains.

“The key is recognizing the transition points—when stabilization turns into the next growth phase,” Beltran added.

Source: Inquirer