Developers unable to adjust condo prices as costs remain high

Property Developers in Metro Manila are unable to adjust condominium prices as inflation and supply chain issues keep costs high, according to real estate services firm Cushman & Wakefield.

“Developers are grappling with increased input costs due to persistent global inflation and supply chain issues, exacerbated by geopolitical tensions. These factors hinder their ability to adjust prices quickly, leading to slower sales and impacting revenues,” Claro dG. Cordero, Jr., director and head of research, said in a statement.

The mid-end segment faces a supply-demand mismatch, mainly driven by elevated condominium prices. Buyers also prefer larger units, while available studio types are often less than 25 square meters (sq.m).

Condominium prices dropped by 9.4% year on year, reversing the 8.3% increase recorded last year and the 10.6% rise in the previous quarter, according to the latest data from the Philippine central bank.

“Until a balance is achieved between buyers’ expectations and developers’ pricing, excess inventory in the mid-end residential condominium sector will persist,” Mr. Cordero said.

The Metro Manila market has a total supply of 450,000 mid- and high-end condominium units, with around 8% remaining unsold.

Before the pandemic, the annual average completion rate for residential condominiums was 35,000 units. Over the past five years, it has declined to 25,000 units.

Outside Metro Manila, unsold inventory is lower at 5%, with about 250,000 completed units.

Dominant locations include Metro Cebu at 54%, followed by the Cavite-Laguna-Batangas corridor (24%), Metro Davao (13%), and Metro Iloilo (3%).

In the Metro Manila office market, vacancy rates are expected to stabilize at around 17–18% in 2025, Cushman & Wakefield said.

“Despite the return of office space from POGO (Philippine offshore gaming operators) companies, absorption rates have improved from pandemic lows but remain influenced by flexible work trends and corporate policies. On the other hand, some companies mandating a return to the office are positively impacting demand growth,” it said.

In central business districts (CBDs), average office rentals have declined by 2.9% annually, while rental rates in non-CBDs fell by 4.2%.

“This trend reflects a continued flight to quality, with CBD office developments benefiting from their superior finishes, amenities, and tenant mix,” Cushman & Wakefield said.

It also noted the rise of office spaces in non-CBDs, with 2.9 million sq.m. added outside Makati and Bonifacio Global City in the past decade. This was driven by flexible work trends and developments outside CBDs.

For retail, the property consultant noted an increase in redevelopments of existing spaces, incorporating additional features to enhance the shopping experience. Mid-end and high-end shopping malls have an average annual supply of about 376,000 sq.m., Cushman & Wakefield reported.

In the hotel segment, Cushman & Wakefield cited uneven regional recovery due to the untapped potential of many tourist destinations. It expects 1,600 additional keys in the mid-end and higher-end hotel and serviced residence segments this year.

However, it may take five years to reach the projected 70,000 keys due to construction delays.

Meanwhile, Cushman & Wakefield highlighted rising demand in the logistics and industrial sub-sector, driven by the growth of the digital economy.

However, it emphasized the need to improve the quality of logistics facilities to meet the demands of new occupiers. Challenges in the sector include achieving sustainability targets, clarifying restrictions related to data privacy laws, and addressing the high costs, availability, and viability of support utilities.

“Across all key Philippine real estate sub-sectors, the increased demand for higher-quality, well-located, and resilient developments is significantly shaping the future real estate landscape,” Mr. Cordero said. “Investors and tenants prioritize properties in prime locations with superior amenities and robust infrastructure.”

Source: Manila Times

Trump's tariffs will raise the roof on US home prices

Homes – the most expensive item most Americans ever buy – are about to get even pricier if the Trump administration’s proposed tariffs take effect.

An analysis from John Burns Research and Consulting, which focuses on the housing industry, estimates the cost of a newly constructed home will increase by nearly 5% if the White House’s proposed tariffs are implemented. That’s about $21,000 on the median-priced new home.

While the Trump administration paused proposed 25% levies on Canada and Mexico for at least a month, a 10% tariff on goods imported from China took effect Monday.

Tariffs "are going to be an affordability shock if they come through,” said Matthew Saunders, senior vice president of building products research at the company.

Residential construction requires many ingredients. In most categories, the vast majority of the import supplies come from the trading partners targeted this month.

Roughly 60% of all hardware imports come from China, Canada and Mexico, according to Saunders’ analysis. Nearly three-quarters of imported sawmill wood products come from Canada. And perhaps surprisingly, the U.S. imports more major household appliances from Mexico, by dollar amount, than from China.

Though 5% may not sound like a lot, some context is crucial. The median price of a new home in December 2024 was $427,000, according to the Census Bureau. That’s up 30% in five years – and mortgage rates now are roughly double what they were just before the COVID-19 pandemic.

And tariffs may also have some knock-on effects, Saunders noted. For example, domestic suppliers of materials are likely to raise their prices in line with those from tariff-affected countries simply because they can.

The simmering trade war with Canada is also likely to affect the supply of lumber in the longer run, said Stinson Dean, an investor who runs Deacon Lumber.

“The bigger problem is the long-term effect of making sawmill operations in Canada unviable because of their increased cost to do business in the U.S.,” Dean said. “We don't need that much lumber right now because of the state of the housing market, but eventually that'll change, and we'll need all the lumber we can get.”

When consumer demand for new homes perks up – likely when mortgage rates fall significantly – the production capacity won’t be there, he said.  

“You don't even have to implement the tariff. The threat of the tariff has already done the damage to potential increases in supply.”

Higher costs for building materials also exacerbate severe labor shortages in the construction industry, Saunders said. Many homebuilders won’t be able to swallow all of the additional costs, and at some point consumers won’t be able to afford to buy.

“In terms of immigration, potential deportations, tariffs, these are all adding to what's already an unsupportable environment.”

Source: USA Today

Pricing Greenland: The Essence of the Deal

Executive Summary

• President-elect Trump has floated the idea of either purchasing Greenland from Denmark or allowing the territory to join the United States of its own accord.

• The idea is not novel: The United States has a history of major land purchases and has considered purchasing Greenland before – for $5.5 million in 1868 and for $100 million in 1946 – but what would the price be this time?

• This paper identifies the ballpark purchase price in two ways: using the market price of its mineral reserves suggests a price near $200 billion, while using Iceland as a proxy for the value of its North Atlantic location suggests a price just shy of $2.8 trillion.

Introduction

In late 2024, President-elect Donald Trump suggested that the United States buy Greenland from Denmark. This has implications for U.S. national security: Greenland is home to the U.S. military’s Pituffik Space Base and growing North Atlantic shipping lanes have drawn interest from Russia and China. Moreover, Greenland hosts vast mineral resources including natural gas, oil, rare earths, and copper. Currently, much of the global supply of these minerals comes from China.

This is not the first time the United States has considered buying the autonomous Danish territory. In 1868, Secretary of State William H. Seward pushed to acquire both Greenland and Iceland for $5.5 million, yet no formal offer ever materialized. In 1946, President Harry Truman offered Denmark $100 million for the island. Today, that offer is equivalent to about $1.6 billion when adjusting for inflation. When accounting for U.S. gross domestic product (GDP) growth and the offer value as a percentage of GDP at the time, this comes out to $12.9 billion in today’s dollars.

President-elect Trump has not attached a specific dollar amount to his suggestion to buy Greenland. Nevertheless, the interest in Greenland as a source of minerals and as a strategic trade and military location may offer a strategy for identifying a ballpark price. On the one hand, one could estimate the value of known mineral resources and the value of what could be extracted. This is essentially valuing Greenland for “what you get.”

Alternatively, one could estimate the price from Greenland’s North Atlantic location – an estimate based on “where you get it.” From the “what you get” perspective, the value of Greenland’s known mineral resources is $4.4 trillion, but only a small fraction can currently be extracted economically. An estimate based on that fraction is $186 billion. Using the “where you get it” approach, considering its strategic geographic location, balloons the price to $2.76 trillion.

To be clear, these estimates are not intended to answer the question of whether it is a good idea for the United States to attempt to buy Greenland, or for Denmark to sell Greenland; they are simply to inform any discussion.

Methods of Pricing

Sum of Its Parts: What You Get

One way to estimate the price of Greenland is to assess the market value of its most important mineral reserves to determine the potential long-term economic value of the island’s resources. Figure 1 displays the known critical minerals and energy resources of Greenland alongside recent average market prices to provide a total price estimate.

Figure 1: Known Mineral and Energy Resources in Greenland

Resource	Known Resources (Thous. of Metric Tons) *Unless otherwise noted	Price Per Metric Ton (Current $)	Total Value (Millions)
Antimony	3.8	$12,382	$47
Baryte	480	$150	$72
Beryllium	0.07	$1,400,000	$91
Chromium	560	$9,261	$5,186
Coal	183,000	$69	$19,627
Copper	108	$8,992	$971
Feldspar	80,800	$102	$8,242
Fluorite	250	$360	$90
Gallium	152	$255,730	$38,871
Graphite	6,000	$1,200	$7,200
Hafnium	108	$4,537,200	$487,749
Lithium	235	$113,585	$26,693
Molybdenum	324,000	$55,600	$18,014
Natural Gas	148,000 bill. cu ft	$0.00219/cu ft	$324,120
Niobium	5,900	$25,000	$147,500
Oil	17.5 billion barrels	$80.53/barrel	$1,409,275
PGM*	0.58	$30,583,398	$17,616
Phosphorus	11,500	$165	$1,898
REE*	36,100	$42,922	$1,549,484
Silicon metal	2,800	$2,207	$6,180
Strontium	9,800	$72	$702
Tantalum	916	$190,000	$174,040
Titanium	12,100	$2,475	$29,948
Tungsten	26	$260	$7
Vanadium	179	$14,612	$2,616
Zirconium	57,100	$3,014	$172,099
Total			$4,441,399
Excluding Oil and Gas			$2,708,004

Source: The Geological Survey of Denmark and Greenland, The U.S. Geological Survey

PGM= Platinum Group Metals (median price); REE= Rare Earth Elements (median price)

Given current market prices and estimated resources, Greenland’s critical mineral and energy assets would be worth approximately $4.4 trillion. Notably, Greenland ceased issuing licenses for oil and gas exploration due to both climate and cost concerns; removing oil and natural gas from the calculation would bring Greenland’s value to roughly $2.7 trillion. If Greenland were to join the United States, however, many or all these restrictions would likely be removed. It is also important to note that market prices for these resources fluctuate and introducing vast amounts of minerals to the global market would likely put downward pressure on prices.

It is more likely that a bid for Greenland would be based on a value for mineral reserves, which is a subset of known resources that are considered economically viable for extraction. As of 2019, 35,000 square kilometers (just 1.6 percent of the land area) in Greenland were under exploration for potential mining sites or mineral deposits. Expanding exploration would require a significant investment to build infrastructure sufficient to extract known resources.

Given Greenland’s harsh environmental conditions, limited workforce, and need for an infrastructure buildout to make extraction possible, the conversion rate from resource to reserve is likely low. A U.S. Geological Survey report showed that Greenland’s reserves of rare earths – which are strategically important as China dominates global supply – were 1.5 million tons, a resource-to-reserve conversion rate of 4.2 percent. Assuming this conversation rate was consistent across all mineral resources, the estimated value would be a much more modest $186 billion. This estimate should be considered a lower bound as it is likely some of the known resources are more economically viable to extract than others. This estimate also excludes the possibility that resources become more viable to extract over time as it is difficult to determine future technological advancements or higher resource prices.

Strategic Location: Where You Get It

Much of the national security interest focuses on shipping lanes linking Europe, North America, and Asia through Greenland that are made viable by the receding Arctic ice cap. These trade routes have also drawn interest from geopolitical rivals, with China seeing the region as vital to its “polar silk road” and Russia interested in securing its own access to Arctic minerals. The strategic importance is akin to the shipping lanes surrounding Iceland, which reduce shipping times by as much as 35 percent. Moreover, the United States has military interests in Greenland. Gaining control of the island would give the United States a greater footprint between Russia and the U.S. mainland.

What would it cost to purchase Greenland and achieve these strategic and military objectives? Iceland, because of its similar location, is also strategically important to the United States. Among other things, it puts a U.S. presence in the middle of the North Atlantic to deter Russian aggression. Thus, one can use the cost of buying Iceland to estimate the cost of buying Greenland. If the United States were to purchase all the commercial and residential real estate on Iceland it would come with a price tag of $131 billion, or $1.28 million per square kilometer. Extrapolating this estimate to the size of Greenland would result in an estimated value of $2.76 trillion. This provides a rough pricing estimate on the location of Greenland and lends some tangible value to the intangible and difficult to determine price of U.S. national security.

Past U.S. Land Purchases

The largest land purchase in U.S. history was the Louisiana Purchase in 1803, a $15 million deal with France that represented over 3 percent of U.S. GDP at the time. Today, the equivalent GDP would be over $890 billion. The most recent land purchase was the 1917 $25-million deal to acquire the Virgin Islands, which would amount to about $12.1 billion today accounting for U.S. growth. These past land purchases offer a comparative analysis to consider what the United States might be willing to offer for Greenland given historic examples.

Figure 2: Previous U.S. Land Purchases

	Year	Purchase Price (millions)	Price per km2	Percent of GDP at Time of Purchase
Louisiana Purchase	1803	$15	$7.01	3.04%
Florida Purchase	1819	$5	$26.78	0.68%
Gadsden Purchase	1854	$10	$130.21	0.26%
Alaska Purchase	1867	$7.2	$4.74	0.09%
U.S. Virgin Islands	1917	$25	$71,023	0.04%

Source: FRED, Measuring Worth Datasets, United States Territorial Acquisitions

In 1868, the United States considered purchasing both Greenland and Iceland from Denmark for $5.5 million which, as a proportion of GDP, is comparable to about $19.6 billion today. In 1946, the United States officially proposed to purchase Greenland for $100 million, roughly $12.9 billion relative to the U.S. economy in 2024.

Figure 3: Previous Offers to Purchase Greenland

Previous Proposal to Purchase Greenland	Year	Offer ($ millions)	Price Per km2	Percent of GDP at Time of Offer
Greenland and Iceland	1868	$5.5	$2.54	0.07%
Greenland	1946	$100	$46.17	0.04%

Source: Measuring Worth Datasets, Time, Nunatsiaq News

Offering between $12.9 billion and $19.6 billion for Greenland today would match these historical analogues as a percentage of U.S. GDP in 2024, accounting for decades of economic growth since the last offer. These bids would end up providing Denmark between three and five times the total GDP of the island. If the United States were to value Greenland at $186 billion based on estimated mineral reserves, this would equate to approximately 0.64 percent of 2024 GDP, similar to the Florida Purchase of 1819.

Other Estimates

In a recent article in The New York Times, David Barker, a real estate developer and former economist at the New York Federal Reserve, estimated Greenland’s value to be between $12.5 billion and $77 billion. Each of these estimates accounts for the economic growth of the United States since the purchase of Alaska and the economic growth of Denmark since the United States purchased the Virgin Islands.

Conclusion

President-elect Trump’s idea to acquire Greenland has precedent, as the United States has a history of land purchases and has offered to purchase Greenland before. But what would be the asking price? The national security rationale for Greenland stems from both its military value and proximity to increasingly important Arctic shipping lanes and its large critical mineral deposits. We estimate a ballpark price in two ways: using the market price of its mineral reserves suggests a price near $200 billion, while using the price of its North Atlantic location suggests a price just under $2.8 trillion.

To be clear, these estimates are not intended to answer the question of whether it is a good idea for the United States to attempt to buy Greenland, or for Denmark to sell it, but simply to inform any discussion.

Source: American Action Forum