Written by: Rita Magallona
For the first time in ten years, Metro Manila’s condominium market is experiencing a downturn. According to the global real estate services firm Colliers International Inc., prices will drop by 15% from 2019. However, the firm also expects the market to recover slightly in 2021.
If you’ve been planning to buy a condo, the current property price drop might look like a good sign. Or is it?
End of Decade-Long Property Boom
This is a significant decline following an unprecedented property boom driven by low interest rates, the outsourcing sector’s expansion, and foreign worker remittances. The last time condominium prices declined was in 2009, when it went down 1.5%.
Less Condo Units Due to the Enhanced Community Quarantine
Colliers also reduced their expected number of completed condominium units to 11,000 from their previous estimate of 14,000 for this year. They attribute this lower estimate to the stoppage of construction work because of the implementation of the enhanced community quarantine (ECQ) in Luzon.
But while the work stoppage led to a slower completion rate in 2020, they expect it to go back up in 2021, as construction will resume and new demand comes in.
Rise in Rental Property Vacancy
The property services firm also forecasts a 5.5% decline in residential property rents while vacancy will rise 15% from 2019’s 11%. However, they do see the market improving in the third quarter leading up to a recovery in demand and supply by 2021.
A Golden Opportunity to Buy a Condominium Unit
Given these forecasts, Joey Bondoc, Senior Research Manager at Colliers International Philippines encourages buyers to seize the opportunity of acquiring a condo now at more attractive prices, especially for mid-income condominium units.
On the other hand, Bondoc, in the same report, encourages developers to “highlight high-quality property management with a focus on sanitation and emergency preparedness, implement creative lease terms for Ready-for-Occupancy (RFO) units, and offer flexible payment terms to attract buyers, especially as pent-up demand starts to be released in 2021.”
These estimates and forecasts are based on the assumption that the Philippine economy will contract this year and that the coronavirus will be contained by the third quarter.
In the meantime, stay home and stay healthy!
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