By Marianne V. Go (The Philippine Star) Updated August 22, 2009 12:00 AM
MANILA, Philippines - The residential sector is reportedly showing some signs of recovery after a sluggish first quarter, international property consultant Colliers International said.
In a recent report, Colliers said that “developers are fast to hint at a better performance for the April-June period, even in the high-end market which took a big hit since the residential market slowed down late last year.”
“Historically, sales volumes are meant to pick up during mid-year; and because of a lower base in the last three quarters,” Colliers pointed out, “but second quarter sales volumes are expected to indicate a notable increase.”
Unfortunately, though, Colliers acknowledged that “a full fledged recovery may not be around the corner just yet. This is because of the current incredible buildup of residential condominium supply in Metro Manila, in which there are more than 60,000 condominium units and more than 100 projects in either pre-selling or under construction (pre-completion) mode.”
Colliers forecasts that if all goes as planned in the next three to four years, the supply of residential condominiums in Metro Manila will almost double.
Colliers said that as of end-2008, there were 60,000-80,000 units in Metro Manila.
Colliers further admitted that “it is highly unlikely that developers will offer significant discounts and changes in their selling prices to entice the market into buying more, and the current sales volumes are not enough to support the take-up needed for all the Metro Manila projects on the table.”
Furthermore, Colliers said there is a substantial amount of supply in the secondary market (rents and resale) from speculative investors or those who bought units to be rented out.
Colliers’ pointed out on that “when prices are ‘sticky downward’ (nobody’s lowering prices despite anemic first half 2009 demand and the sizeable supply available) which is happening now, the recovery in the residential sector should largely depend on buyers’ sentiment and overall demand strength. The positive market sentiment from buyers and investors, coupled with aggressive marketing and positioning of industry players should help many projects sell. But the bottom line is, yes the market will eventually take up all these… residential condominium units in the future, but not as soon as developers probably hoped for.”