Property consultant KMC Savills said a price correction in the condominium market is necessary given the current oversupply.
The oversupply is leading to decentralization, with more opportunities expected in the mid-tier segment in the coming years, noted Joshua de las Alas, KMC Savills associate director for research.
De las Alas said the oversupply is particularly prevalent in the P3 million to P7 million segment, which accounts for roughly 51 percent of the excess supply.
“Currently, there are around 251 actively selling projects, providing a total of approximately 164,000 units in the market. The structure of the market shows a 77 percent absorption rate, indicating a surplus of around 37,800 units,” he said.
KMC Savills said over the next three years, another 17,000 unsold units are scheduled for turnover.
“However, this number is expected to drop to approximately 5,000 units by the time they are ready for occupancy, as 12,000 units are projected to be sold prior to turnover,” it said.
The market is showing signs of “adjustment,” with residential condominium prices in Metro Manila declining by 14.27 percent year-on-year in the third quarter of last year, the steepest drop since the second quarter of 2021, KMC Savills noted.
Currently, condominium prices average P217,000 per square meter.
“The real estate market in Metro Manila is undergoing dynamic shifts across the office, industrial, and residential sectors. While challenges such as vacancy rates and unsold inventory persist, the market also presents opportunities for growth and recovery,” KMC Savills said in a statement.