PROPERTY DEVELOPERS in Metro Manila are unable to regulate condominium prices as inflation and provide chain issues keep costs high, in accordance with real estate services firm Cushman & Wakefield.
“Developers are grappling with increased input costs because of persistent global inflation and provide chain issues, exacerbated by geopolitical tensions. These aspects hinder their ability to regulate prices quickly, resulting in slower sales and impacting revenues,” Claro dG. Cordero, Jr., director and head of research, said in an announcement on Tuesday.
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 sometimes lower than 25 square meters (sq.m).
Condominium prices dropped by 9.4% yr on yr, reversing the 8.3% increase recorded last yr and the ten.6% rise within the previous quarter, in accordance with the newest data from the Philippine central bank.
“Until a balance is achieved between buyers’ expectations and developers’ pricing, excess inventory within the mid-end residential condominium sector will persist,” Mr. Cordero said.
The Metro Manila market has a complete 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 accomplished units.
Dominant locations include Metro Cebu at 54%, followed by the Cavite-Laguna-Batangas corridor (24%), Metro Davao (13%), and Metro Iloilo (3%).
Within the Metro Manila office market, emptiness 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) firms, absorption rates have improved from pandemic lows but remain influenced by flexible work trends and company policies. However, some firms 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 up to now decade. This was driven by flexible work trends and developments outside CBDs.
For retail, the property consultant noted a rise in redevelopments of existing spaces, incorporating additional features to reinforce the shopping experience. Mid-end and high-end shopping malls have a mean annual supply of about 376,000 sq.m., Cushman & Wakefield reported.
Within the hotel segment, Cushman & Wakefield cited uneven regional recovery because of the untapped potential of many tourist destinations. It expects 1,600 additional keys within the mid-end and higher-end hotel and serviced residence segments this yr.
Nonetheless, it could take five years to succeed in the projected 70,000 keys because of construction delays.
Meanwhile, Cushman & Wakefield highlighted rising demand within the logistics and industrial sub-sector, driven by the expansion of the digital economy.
Nonetheless, it emphasized the necessity to improve the standard of logistics facilities to fulfill the demands of recent occupiers. Challenges within 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 longer term real estate landscape,” Mr. Cordero said. “Investors and tenants prioritize properties in prime locations with superior amenities and robust infrastructure.” — Beatriz Marie D. Cruz
