Metro Manila condo demand up 19% in Q1, seen as seasonal rebound — LPC

DEMAND for Metro Manila condominiums increased 19% year on year in the first quarter (Q1), driven by end-user purchases and developer incentives, though Leechiu Property Consultants (LPC) said the uptick reflects a seasonal rebound rather than a full market recovery.

Total condominium take-up reached 7,732 units in the January-to-March period, recovering from a “sharp slowdown” in the previous quarter, LPC said in its first-quarter residential market report released last week.

Despite the improvement, LPC said the market remains vulnerable to external shocks and structural constraints.

“A more decisive recovery is unlikely until external risks moderate and rental yields begin to normalize relative to capital values,” it said.

Investor activity remained subdued, with rental yields at 3.8% for primary units and 4.6% for secondary units, levels the firm said are insufficient to offset high acquisition costs.

“Speculative investor interest remained muted due to subdued rental yields as rental rates normalize and capital values of primary units remain elevated,” it said.

The market also faces elevated inventory, with unsold condominium stock equivalent to about 31 months, though this was partly eased by slower project launches and improved absorption.

“Tempered project launches and incremental gains in absorption provided temporary relief to inventory pressure,” LPC said.

Demand was more resilient in the mid-market segment, while higher-end buyers continued to adopt a wait-and-see approach.

LPC said global risks, including geopolitical tensions in the Middle East, could drive inflation and interest rates higher and dampen remittance flows from overseas Filipino workers.

“Given heightened global and geopolitical risks, market participants should maintain a cautious stance — closely assessing supply-chain impacts, preserving liquidity, and deferring aggressive expansion until conditions stabilize,” said Roy Golez, LPC director for research, consultancy, and valuation.

Residential activity is also gradually shifting to provincial areas supported by infrastructure development, where flexible payment terms and improved accessibility are helping sustain demand and price growth, the firm said. — Alexandria Grace C. Magno