‘Soft landing’ for realty sector expected

/ 12:10 AM August 14, 2014

Metro Manila’s residential property market is going on a “soft landing” than a bubble-bursting phase as some developers hold back on new product launches to avoid overwhelming the market, experts from property consulting firm Colliers International said Wednesday.

Julius Guevara, director for research and advisory at Colliers International Philippines, said that in the second quarter, preselling take-up bounced by 25 percent compared to the first quarter.


Year-on-year, take-up of units offered through preselling was still down 6 percent for the second quarter while year-to-date, it’s still down 9 percent. On the other hand, he said new product launches had gone down by 50 percent.

The quarter-on-quarter rebound in the second quarter, Guevara said, could be attributed to seasonality factors as the first three months of the years were usually a slow period. However, he said the overall trend based on the first two quarters was that sales take-up this year would be lower than the previous year’s.


This year, Guevara said the market would likely take up a total of 30,000 to 40,000 levels compared to last year’s pre-selling of 46,000 units.

“Demand is really slowing down in the affordable segment and to a certain extent in the mid-income segment but luxury segment is strong, but it’s just a small component of the market,” Guevara said in an interview.

The new launches in the second quarter, Guevara reported, were mostly in the affordable and luxury segments.

“It’s not a bubble bursting. Because developers are pulling back, the effect of that is you won’t see a bubble. It will be a soft landing,” he said.

By holding back on new launches, developers are waiting for existing inventory to be absorbed by the market.

On delivery of residential units in major central business districts (CBDs), Guevara said that out of an expected 7,400 new units to be completed by yearend, only 30 percent has so far been delivered in the first semester, leading to a total new supply of 2,210 units.

With more than 30,000 units expected to be delivered by 2017, Guevara said total inventory in the five major CBD sub-segments—Makati, BGC, Ortigas, Rockwell and Eastwood—would amount to 90,400 units. Doris C. Dumlao


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TAGS: ‘soft landing’, Business, preselling, realty sector
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