A slowdown in middle-income condo launches is happening this year, lessening the risk of a property bubble, real estate services firm Prime Philippines said.
In an email to The Manila Times, Prime Philippines Managing Director Jet Yu noted condominium development projects in Metro Manila will decelerate this year.
“There’s no danger of property bubble bursting,” Yu said.
“As demand stabilizes, we will see less developers applying to develop new middle to low market segment condominiums this year,” he added.
Colliers International Philippines Research Manager Joey Roi Bondoc earlier made a forecast for the Metro Manila residential market, citing the presence of a large volume of supply.
“The outlook for the residential segment remains subdued due to oversupply concerns,” Bondoc said, noting the rising vacancies in the central business districts despite a slowdown in project completions.
“This is due to recent completions that are now starting to trickle into the market,” Bondoc said.
As of the third quarter of 2016, overall vacancies in the Makati CBD residential market reached 11.5 percent from 10.2 percent in the second quarter.
Similarly, overall vacancies in Fort Bonifacio grew to 10.4 percent from 9 percent in the same comparable period.
Only 10,203 new residential units entered the Metro Manila market in 2016, a significant decline from 69,987 units in 2015.
This year, Colliers expects 9,878 units to enter the Metro Manila residential market.
Yu noted that developers tend to shift towards different developments. “We will, however, see a bit of a change in the general real estate direction by the end of the year in terms of condominium development,” he said.
“Middle to low segment condominium developers in Metro Manila are expected to shift to horizontal developments this 2017,” he said.
Yu noted a possible rise in demand for luxury condominiums. “Upscale or luxury segment con dominiums, especially lifestyle condominiums, will continue to grow as demand will still continue partially from expats,” he said.
Property analysts have earlier noted the rise in the demand for the luxury residential segment, noting a limited supply of this type of project in Metro Manila.
Jones Lang Lasalle Philippines Chairman Lindsay Orr noted the luxury residential segment only accounts for around 5 percent of the total development in the country.
“Historically going back in the past ten years and looking forward to the next ten years, it’s only about five percent[of the total supply],” Orr said. “JLL is convinced that there is going to be more demand or pent up demand in the luxury sector as well.”
Santos Knight Frank Associate Director for investment and capital markets Kash Salvador noted of the lack of land for luxury developments in the country.
“Actually, land is very scarce for luxury,” Salvador said. “Land is very scarce that’s why historically there have just been a few projects that went online in terms of luxury,” Salvador previously said.