The oversupply of condominium units in Metro Manila is now estimated to be worth 38 months, as the available supply has continued to increase while there have been 9,000 cancellations, a report released by Leechiu Property Consultants (LPC) on Tuesday showed.
According to the latest LPC report, there were 81,400 units of available supply across 622 actively selling buildings in Metro Manila in the first quarter, which would take an estimated 38 months or over three years to be sold. LPC earlier said the market would normally see 12 months a maximum.
“While three years sounds like a large supply, if you remember the condo buildings, they are typically built in a period of three to four years,” LPC Research and Consultancy director Roy Golez Jr. said at a briefing in Makati City.
“Most developers now actually deliver within a five-year time period so in terms of cash flow, the big guys really are covered when they hit 30 to 40%,” he added.
New launches for the first three months of the year decreased by 77% quarter-on-quarter to 1,347 units, the lowest level in five years, while demand grew by 14% to 6,508 units, and cancellations from the previous quarter were recorded at 9,000.
“The cancellation levels are not increasing. They’ve been either steady or going down, that’s why the increase is not as drastic as before. What the developers really need is to generate more sales consistently kasi (because) the launches are barely there,” Golez said.
The latest figures reflect an increase from the oversupply as of November 2024, when LPC estimated an equivalent of 34 months due to the 6,000 backouts.
To address this, Golez said developers have been offering discounts and offerings such as extended downpayment terms of up to 42 months and deferred payments of up to 120 months for ready-for-occupancy units, and extended downpayment terms of up to 72 months for pre-selling units.
“Most developers practically are reluctant to decrease prices but in effect, what they’re offering to do is offering decreased prices by offering discounts as well as credit payment terms,” he said.
“What we’re seeing is a big opportunity for those who have been intending to buy condo to take a look at all these promos by developers — while the prices remain, the payment terms are easier with less interest,” he added.
Latest data show that there were a total of 758,400 total condominium units in Metro Manila, with 610,000 units ready for occupancy, of which 96% have been sold. There were 148,000 units under preselling, of which 63% have been sold.
Broken down in terms of price segments, the luxury market saw a 39% decline in sales during the first quarter to 72 units from 119 sold in the previous quarter, which Golez attributed to a pivot following the strong growth seen in the last two quarters of 2024.
The middle income segment saw a 21% increase in sales to 803 units, the upper middle income up 49% to 2,304 units, the upscale segment up 26% to 1,649 units, and the high-end segment up 15% to 1,680 units.
Golez also noted that while the oversupply is only in Metro Manila, buyer perception in other areas across the country has been impacted, with brokers in areas such as Davao, Cebu, and Bacolod which have less than a year’s worth of supply.
Moving forward, Golez said the market is still in a wait-and-see mode on how US President Donald Trump’s reciprocal tariffs would impact sales.
“While we’re at the recovery phase, the current global uncertainty might affect confidence in the market to continue any plan. The residential market is highly impacted by perception and that perception definitely has impacted our market starting last Friday up until today,” he said. — RSJ, GMA Integrated News
