Colliers: Firms delaying condo launches as rising rates clip demand

Property services firm Colliers Philippines sees aggressive interest rate hikes cooling demand for new residential condominiums but overall growth should still continue in 2022.

Joey Roi Bondoc, Colliers associate director for research, said pre-sales of condominiums were “likely to be hampered” by rising rates as mortgage payments could be repriced higher.

Some developers, it added, have been compelled to delay property launches in Metro Manila.

“Colliers believes that developers are now taking a more cautious stance as they await the release of the new administration’s economic agenda, including pro-property reforms, and gauge general consumer sentiment amid rising inflation and interest rates,” Bondoc said.

Combat inflation

The Bangko Sentral (BSP) ng Pilipinas signaled on Thursday it was ready to combat inflation with monetary tightening measures after the US Federal Reserve announced another 75-basis point rate increase in key rates.

The BSP announced a surprise 75-basis point hike last July 14 and indicated another increase would happen during its policy meeting next month.

“In our view, launches across the capital region are likely to be stifled by rising interest rates and construction prices,” Colliers said.

Nevertheless, the company expected 2022 preselling activities to beat figures from the previous year, when the broader economy was heavily impacted by stringent pandemic lockdowns.

It said 27,100 units were launched in 2021, of which 12,400 were sold.

“In our view, 2021 take-up figures are likely to be breached this year,” Colliers said.

The company said the industry was supported by improving consumer sentiments and the continued inflow of remittances from Filipinos working overseas.

Meanwhile, Bondoc expected the market for secondary or preowned units to benefit from uptake from foreign employees and from return-to-office mandates.

“We see [these] positively influencing prices and rents in major business districts,” he said.

“To attract potential buyers, we recommend developers offer more attractive and innovative promos and payment schemes; highlight amenities that will differentiate their projects and to attract discerning clients; and explore securing green building certification especially with the growing demand for more sustainable residential projects beyond [the] COVID-19 pandemic,” he added.