The high inventory of condominium units in Metro Manila is forcing developers to explore opportunities outside the capital city. Rising property prices, increased interest rates, and the decline of the POGO sector have contributed to the surplus. Developers are shifting their focus to leisure-centric projects and expanding into provincial areas where demand for horizontal homes is surging.
There is no doubt that Metro Manila has a significant surplus of condominium units, primarily due to rising prices and affordability challenges faced by middle-class Filipinos. Several factors have contributed to this situation, according to Colliers Philippines research director Joey Roy Bondoc.
He highlighted the increase in interest rates, rising land values, soaring construction material costs, and the surge in demand from Philippine Offshore Gaming Operators (POGOs) that developers exploited, leading to inflated property prices. This surplus inventory currently stands at 70 months worth of condominiums in Metro Manila, making it increasingly difficult for even middle-level executives to secure mortgages and purchase these units. Bondoc explained that developers readily capitalized on the POGO demand, which partly fueled the overpricing of condominiums, especially in the Bay Area, from 2016 to 2022, coinciding with the peak of the POGO sector in the country. Developers, who overbuilt during the 2017-2019 period, have since adjusted their strategies. Bondoc noted a shift towards leisure-centric, hotel-centric, and resort-themed developments, reflecting a recognition of evolving market demands. The potential for growth outside Metro Manila has also become apparent, with developers reporting rapid pre-selling rates for projects in provinces like Batangas, Laguna, and Cavite. KMC Chairman Michael McCullough attributed the oversupply to a combination of over-optimism, market miscalculations, and poor timing by developers. He emphasized the need for developers to adopt a more data-driven approach to market analysis and project planning, learning from past mistakes. Cushman and Wakefield Philippines’ director, head of research, consulting, and advisory services, Claro Cordero Jr., echoed this sentiment, pointing out the increasing demand for horizontal developments outside Metro Manila. He observed that buyers seeking more spacious living arrangements and a less congested environment are driving this trend. Cordero highlighted the significant number of vacant condominium units in Metro Manila and the growing popularity of horizontal homes in provincial areas. He projected a substantial increase in the number of horizontal homes outside Metro Manila in the next five years. Developers such as Ayala Land Inc., Megaworld, Rockwell Land, Aboitiz Land, Vista Land, Century Properties, Santa Lucia Land Inc., and PHirst Homes have already ventured into development projects in various provinces, recognizing the shift in buyer preferences
CONDOMINIUMS METRO MANILA PROPERTY MARKET DEVELOPERS POGOS HORIZONTAL HOMES PROVINCIAL AREAS
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