Metro Manila condo oversupply estimated at 29 months’ worth —property consultant

There is now an oversupply of 29 months’ worth of condominium units in Metro Manila due mainly to the high interest rates and external risks along with a shift in buyer preferences, a report released by Leechiu Property Consultants (LPC) on Tuesday showed.

LPC said there are currently 67,600 units across 510 actively selling buildings in Metro Manila, the highest since the COVID-19 pandemic.

Quezon City has the biggest number of available units with 18,500; followed by Ortigas with 13,500; the Bay Area in Pasay with 10,500; Manila with 8,500; and Caloocan with 8,100.

These were followed by Alabang with 5,800 units; and preferred districts Makati (3,400 units) and Bonifacio Global City or Taguig (1,300 units) which continue to have low inventories.

LPC Research and Consultancy director Roy Golez Jr. attributed the oversupply to a mix of high interest rates and external concerns, as well as a shift in preference to single-detached homes and properties in nearby provinces.

“Changing buyer preferences and rising interest rates have slowed demand for residential condominiums in Metro Manila,” Golez said.

“Developers have most likely acknowledged already the oversupply. Let’s call it what it is. It’s an oversupply of condominium units at the market at 29 months supply and they have been very tepid and slow in launching new projects,” he told reporters in Makati City.

This means that it would take 29 months for the current inventory of units to be sold given the prevailing sales pace. LPC said the market would normally see 12 months as a maximum.

This comes as demand has hit the lowest level since the COVID-19 pandemic, stabilizing at 6,885 units sold in the third quarter of the year. Condominium launches also declined by 39% to 2,145 units during the period.

Moving forward, Golez expects the market to rebound as inflation eases and interest rates decline, with the Bangko Sentral ng Pilipinas (BSP) expected to continue with its policy easing cycle.

The Monetary Board of the BSP last month cut policy rates by 25 basis points, the first cut in nearly four years, and the first adjustment since the off-cycle hike in October 2023.

BSP governor Eli Remolona Jr. earlier said a 50-basis-point reduction could be possible in one meeting, but noted that 25 basis points would be the normal adjustment.

“What developers most likely are doing now is reselling or relaunching or reintroducing marketing programs for their current inventory,” Golez said.—LDF, GMA Integrated News