CONDOMINIUM vacancies in Metro Manila edged up in the third quarter, Colliers Philippine said, partly due to Chinese nationals vacating their units in line with a looming ban on all Philippine offshore gaming operators (POGOs).
In a quarterly market report released on Tuesday, Colliers PH said the vacancy rate rose to 17.4 percent in the July to September period from 17.2 percent, particularly in the Manila Bay area.
"Vacancy in Metro Manila's secondary residential market is likely to remain elevated until 2025 due to substantial new supply and as the impact of POGO exodus kicks in," it added.
Colliers PH expects the rate to hit 17.7 percent by the end of this year.
President Ferdinand Marcos Jr. in July ordered that all POGOs — online gambling firms in the country that cater to customers abroad, mostly Chinese — be shut down by the end of the year given alleged links to crime.
POGOs proliferated during the term of former president Rodrigo Duterte and officials at that time said that taxes collected would substantially boost government revenues.
Colliers PH said the increased vacancy would result in slower growth in rents and prices — rents rose by just 0.2 percent in the third quarter — with a projected recovery of between 2.0 percent to 2.5 percent, or to 15.2 percent, from this year to 2026.
Rents and prices are only expected to return to pre-Covid levels by the second quarter of 2028 and the third quarter of 2029, respectively.
"The POGO sector is no longer a major driver of office space demand in Metro Manila and its impact is spilling over to the condominium market," Colliers PH said.
High mortgage and interest rates are also tempering demand for condominium units, it said, and while Bangko Sentral ng Pilipinas rate cuts could boost the sector, "we do not see the reduction having an impact on mortgage rates."
Just 9,300 units were pre-sold in the nine months to September, Colliers PH said, down 53 percent year on year. Unit launches, meanwhile, totaled 8,000 during the period, lower by an even larger 61 percent.
Unsold ready for occupancy (RFO) units were said to be substantial at 27,700 in Metro Manila, holding back developers from launching new projects.
This is particularly seen in the lower to upper middle-income segments, where units are priced from P3.6 million to P12 million, that account for 57 percent of remaining RFO inventory in the metropolis.
Areas with a high level of unsold units include Pasig City, the north and south of Quezon City, Parañaque, north of Manila and the fringes of Makati.
Just 9,890 units are expected to be delivered by the end of this year, down from the previous forecast of 11,290, due to turnover delays at two towers of SM Development Corp.'s Sail Residences in the Bay area.
Developers, Colliers PH said, are continuing to change tack in an effort to stay afloat via more leisure-themed projects including condotels and golf communities outside the metropolis.
"In our view, Ilocos, Baguio, Batangas, Palawan, Boracay, Cebu, Bohol and Davao are locations to watch out for," it noted.
Offers of upgraded amenities and facilities should be the norm, Colliers PH said, including flexible workspaces within residential developments for those under hybrid work arrangements, facilities such as gyms and yoga areas, and also electric vehicle charging stations.
The integration of green technologies will help differentiate offerings and the introduction of artificial intelligence-powered features are seen to be "the norm moving forward."
Given the substantial unsold inventory and to complement the BSP rate cuts, developers should also be proactive in offering promotions, noting that some firms were allowing buyers to move in with downpayments of just 5 percent and taking 25 percent off the total contract price.