Fewer vertical housing projects may be completed this year mainly due to the rise in interest and mortgage rates, as well as the prices of construction materials, which reached a 14-year high, according to Colliers Philippines.
The professional services and investment management firm said the supply of vertical housing projects by yearend may just be about of a third of the total finished units in 2022.
Meanwhile, it expects the segment to rebound next year, with the delivery of more than 11,000 new condominium units in National Capital Region (NCR).
“We project the Bay Area dominating condominium supply across Metro Manila in 2024 as we see the business district overtaking Fort Bonifacio in terms of condominium stock,” said Colliers Director of Research Joey Roi Bondoc.
According to him, the fastest emerging central business district (CBD) in Pasay will likely account for 27 percent of condo inventory in NCR compared to Fort Bonifacio’s (26 percent) 43,800 units, and Makati CBD’s (18 percent) 29,700 units.
From January to March, Colliers recorded 1,200 finished units, or 70 percent lower than from October to December 2022.
Completed developments during the period include Megaworld’s The Ellis in Makati CBD and Manhattan Plaza Tower 2 in Araneta City; Federal Land’s Mi Casa Hawaii in Bay Area; and Keyland Corp. and Ascott Limited’s 110 Benavidez in Makati.
By the end of this year, the company sees a 61-percent decline in condo delivery to 3,540 units from 8,970 units completed last year. Both the Bay Area and Fort Bonifacio will likely account for nearly half of the new inventory in 2023.
Condo units in the secondary market are more in-demand as shown in the growing take-up from local professionals and expatriates, according to Colliers. This has led to a marginal improvement in vacancies across the metro.
The company expects the continued recovery of rents and prices across the capital region but rates would still be below prepandemic levels.
Absorption of condos pre-selling in the first quarter indicates some optimism in the market. However, slower launches continues to be prevalent as developers hold off new project debuts due to elevated interest rates and more expensive construction materials.
Now that there’s a correction happening in the rental space in major business districts, said it is time for tenants to lease condos in key Metro Manila CBDs.
For the first three months of 2023, rental rates for studio and one-bedroom residential units nosedived to more than 40 percent in the Bay Area.
“We attribute this to dampened demand from local professionals as well as exodus of Chinese employees from the offshore gaming sector,” Bondoc said.