Residential Buildings in QC

Andrea Taguines

ABS-CBN News

MANILA - Real estate firm Colliers said Tuesday it was optimistic a second possible <span id="isPasted" style="color:rgb(65, 65, 65);letter-spacing:normal;orphans:2;text-align:left;text-indent:0px;text-transform:none;widows:2;word-spacing:0px;-webkit-text-stroke-width:0px;white-space:normal;background-color:rgb(255, 255, 255);text-decoration-thickness:initial;text-decoration-style:initial;text-decoration-color:initial;display:inline !important;float:none">Bangko Sentral ng Pilipinas interest rate cut this year would help revive demand for residential units especially in Metro Manila amid the continued exodus of Philippine Offshore Gaming Operators (POGO).Colliers Director of Research Joey Bondoc said there was an inventory of more than 21,000 ready-for-occupancy units in Metro Manila as of the second quarter of 2024. About 60 percent of these units remain unsold mainly due to elevated mortgage rates, he said.These are the mid-income priced projects, which even overseas Filipino workers (OFW) were wary of buying despite high remittances, he said. “During the POGO demand, they were acquiring residential units because some developers told them, if you buy now and once it’s turned over, you can lease it out to the Airbnb market or to the POGO sector. That’s what they promised to the OFW investors. Now the developers can no longer promise these demand drivers,” he said.Bondoc said the impact of a second rate might only be felt by the middle of 2025.“There’s a lag time. It will not immediately result in lower mortgage rates… The average mortgage rate right now is about 8.3 percent so that’s still pretty high and that has been resulting in lower takeup of residential units,” he said.Even if mortgage rates start coming down, Colliers projected that it could take up up to five years for the market to fully absorb the RFO units with the permanent exit of POGOs.“That’s also the same length of time we are projecting for the office market to fully absorb the vacated office space, which is currently at 2.6 million square meters,” added Bondoc.The vacancy rate for office spaces in the capital region was at 18.3 percent in the first half of 2024, from just 4 to 5 percent pre-pandemic, based on Colliers data.In response to this, Bondoc said developers adjusted to the situation by launching more upscale and luxury projects as well as leisure-centric condo hotels, which are where the demand is at.“The demand in Metro Manila is slowing down but we’re seeing the shift to suburbia. If you look at the leisure-centric condo hotels in Batangas, Davao, and Palawan, those projects are doing very well, and in Cebu,” he said.For economist Bernardo Villegas, another area to watch out for in the next five to 10 years is the Luzon Economic Corridor.Villegas said more American and Japanese chip factories could relocate there from China due to geopolitical tensions.“The Americans and the Japanese are planning to invest a lot of money from Batangas to Manila to Bataan in railways, in energy plants, and in other infrastructures that will create a mini Vietnam in that area… So a lot more semiconductor companies will be locating in that region and that will be a tremendous opportunity for more real estate projects,” he said.But he cited the need to address high power costs in the Philippines to attract more foreign investors, saying the Marcos administration’s nuclear push was a step in the right direction.The central bank will decide on interest rates again in an October 16 meetings.<div><a href="https://news.abs-cbn.com/business/2024/10/2/-jumbo-bangko-sentral-rate-cuts-seen-amid-similar-moves-by-fed-1316">&#x27;Jumbo’ Bangko Sentral rate cuts seen amid similar moves by Fed</a></div><div> </div><div><iframe width="640" height="360" src="https://www.youtube.com/embed/rKqN7HVVwOo??si=KHqHeGXcAvRigdj-autoplay=1&amp;wmode=opaque&amp;rel=0" frameBorder="0" allowfullscreen="" class="fr-draggable"></iframe> </div>

A real estate firm said a second possible Bangko Sentral rate cut would help revive the demand for residential units, especially in Metro Manila.

A real estate firm said a second possible Bangko Sentral rate cut would help revive the demand for residential units, especially in Metro Manila.

Colliers: Second possible BSP rate cut may only benefit residential property market by mid-2025 | ABS-CBN

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Colliers: Second possible BSP rate cut may only benefit residential property market by mid-2025

Colliers: Second possible BSP rate cut may only benefit residential property market by mid-2025

Andrea Taguines,

ABS-CBN News

Published Oct 16, 2024 11:34 AM PHT

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