Why Metro Manila’s current condo inventory is a blessing in disguise

This surge in middle class buyers is great news for real estate investors as they provide something incredibly valuable to the real estate market—demand, resilience and stability. (FILE PHOTO)

(Conclusion)

Favorable economic conditions—including increased purchasing power, cooling inflation, and stable interest rates—create a fertile ground for real estate investments.

For this year, experts forecast a strong recovery in the property sector, with residential properties seeing the most growth, particularly those in emerging cities and suburban areas outside Metro Manila, where demand is also growing due to urban expansion.

So as inflation slows, the purchasing power of Filipino consumers improves, allowing for more individuals to enter the property market. The affordability created by lower inflation, paired with stable mortgage rates, makes property ownership increasingly attainable, offering new opportunities for developers, investors and homebuyers.

A thriving middle class

Over the past three years, household incomes have risen by an average of 6.8 percent annually, according to the Philippine Statistics Authority (PSA).

This steady growth in earnings has had a profound impact on spending power and financial security, empowering more families to upgrade their lifestyles, including their living arrangements.

The ability to afford better housing is a direct result of this increased disposable income. Families who previously hesitated to enter the real estate market are now exploring options to move into mid-range condominiums or invest in homes that better suit their needs. This shift represents a crucial element of the real estate market’s resilience and potential for long-term growth.

Valuable market

The middle class in the Philippines isn’t just big, it’s actually growing. This segment is projected to increase by 30 percent by 2030. With this growth comes more demand for housing, not just in Metro Manila but in rapidly developing urban centers like Cebu, Davao, and Pampanga.

This surge in middle class buyers is great news for real estate investors as they provide something incredibly valuable to the real estate market—demand, resilience and stability. Unlike luxury buyers or speculative investors who might back out and shift to other asset classes when the economy slows down, the middle class is looking for long term investments.

The middle class Filipino family wants a home to live in, not just a property to flip.

By focusing on the middle class, real estate developers and investors can tap into a market that is not only expanding but is also less volatile.

Developers are thus rushing to meet this demand by launching new townships and affordable residential projects in key areas outside the crowded urban core. And thanks to the government’s infrastructure program, key projects like highways and railways are making once remote areas more accessible and attractive for real estate development.

Fertile ground for businesses

The entrepreneurial spirit in the Philippines is also on the rise.

Government initiatives like tax incentives for small and medium enterprises (SMEs) and digitalization support for startups have created a fertile ground for businesses to flourish. The success of these ventures directly enriches the middle-income group, providing them with additional capital to allocate toward real estate investments.

The middle class is learning how to grow and manage their wealth through different investment vehicles. (HTTPS://WWW. MARKETREVIEW.COM)

More jobs, more homebuyers

Job creation remains robust, with the Philippine economy adding over 1.2 million jobs in 2024 alone (PSA).

With stable employment comes the capacity to invest in long term assets like real estate. The continued growth of the IT and business process management (IT-BPM) sector, the rise of virtual assistants (VAs) and even the lure of content creation. The manufacturing and renewable energy industries are likewise expanding, contributing significantly to employment opportunities.

These industries offer competitive, above-average salaries, and career advancement pathways, enabling professionals to achieve upward mobility and secure financial stability. This allows Filipinos to augment their income and make their dream home a reality.

Rising sophistication among investors

The middle class is no longer just earning—they’re also learning how to grow and manage their wealth with the financial literacy programs and the growing accessibility of investment vehicles like stocks, real estate investment trusts (REITs), mutual funds, and insurance products.

As of 2024, the Bangko Sentral ng Pilipinas (BSP) reported a 22 percent rise in first-time retail investors, many of whom belong to the middle-income segment.

Demand will catch up

Historical trends show that oversupply is always temporary.

Although the Philippine property market saw a similar glut in 2019, occupancy rates bounced back to over 91 percent (Colliers) mid-2022. The same is expected now, with projected absorption rates improving as economic conditions stabilize.

Additionally, urban migration remains strong. Metro Manila continues to be a magnet for job seekers, young professionals, and students, ensuring sustained demand for residential units.

Turning challenges into opportunities

Developers and sellers have an opportunity to pivot their strategies.

Target the middle class. With the middle class expanding, tailoring offerings to this demographic’s needs (e.g., mid-range units, affordable payment terms) can yield significant returns.

Highlight ESG and sustainable living. Properties with green certifications and sustainable designs are increasingly appealing. According to a 2024 Lamudi report, 70 percent of property seekers prioritize eco-friendly developments.

Leverage technology. Virtual tours, augmented reality, and online booking systems make the buying process more convenient and appealing. Slowly, I’ve been seeing more local governments embracing online options for real estate tax payments.

A cyclical market is a resilient market

While challenges exist, the situation is not as dire as some might suggest. The consensus among analysts and experts remains cautiously optimistic.

The situation presents an opportunity for recalibration—both for developers and buyers. The key to navigating this oversupply will lie in aligning market offerings with demand shifts, focusing on affordability, location, and quality.

For those with a long term view, the market holds potential, but only for those prepared to adapt to a more nuanced landscape.

The author (CIS, CSR, CTP, CUSP and CFMP) has 20 years of experience as an entrepreneur, real estate investor, stock broker, financial literacy advocate, a multi-awarded and sought-after investment educator and public speaker. He is the vice president and head of Business Development and Market Education Departments together with the OFW Desk of First Metro Securities Brokerage Corp., a member of Metrobank’s Financial Education Editorial Advisory Board, and the host of ‘Wais By Choice’ Podcast on Spotify and YouTube. Email him at andoybeltran@gmail.com