Metro Manila’s high-rise residential property market is showing signs of a slowdown, due mainly to the massive supply of affordable residential units, said experts from property consulting firm Colliers International.
The high-end residential sub-segment, however, remains robust as new supply was just matching demand, Julius Guevara, director for research and advisory at Colliers International Philippines, said in a briefing on Thursday.
For the first quarter, Guevara reported that sales takeup at the primary market for high-rise residential units slowed down by 12 percent year-on-year.
The overall picture, Colliers Philippines managing director David Young said, was that the Philippine real estate market was well into the second decade of a “prolonged” expansion.
In the commercial sector, he said growth had been sustained in the last three to four years but developers were still not building enough commercial space to accommodate demand from the office sector.
“This contrasts with the emerging situation in residential sector,” Young said, noting that developers have tempered new launches after realizing they had ramped up inventory too quickly.
Based on Colliers’ report, licenses to sell issued by the Housing and Land Use Regulatory Board (HLURB) increased by 39.7 percent year-on-year from December 2013 to February 2014.
Residential projects, however, contracted to 59,200 units, some 7,200 units lower than the same period last year.
Significant increases were posted in the socialized (+17.4 percent) and low-cost (+23.2 percent) housing segments as developers started to comply with government requirements to produce socialized housing units in exchange for value-added tax exemptions.
On the other hand, high-rise residential projects declined by 38.6 percent despite a surge of launches in December 2013, as developers held back on new launches in the first two months of the year.
Meanwhile, the number of commercial condominiums decreased by 50 percent to 429 units during the period.
Guevara said the slowdown can be traced to the rapid addition of new supply in the affordable residential segment—or those with units priced at P1.23 million and below—in the last few years.
The housing demand that developers often referred to, he said, was actually coming from those who can’t afford housing and buying a residence in Metro Manila was still out of these people’s budget.
To address such a backlog, he said developers must focus on mass housing outside Metro Manila.
But Guevara also noted that certain segments of the high-rise residential market remained strong, particularly the upscale (P5 to P7 million per unit) and luxury (over P7 million per unit).