Property developers offer more incentives

With the property developers continuing to face challenges in reducing their huge excess office and residential inventories in Metro Manila, Colliers Philippines sees both buyers and tenants being spoiled with extra perks.

“In 2024, the Metro Manila office market posted its first negative net take-up (45,100 square meter contraction in net absorption) since 2021, as space surrenders outpaced demand,” said Colliers Research Director Joey Bondoc. 

He noted that, “While significant space surrenders were recorded due to the exit of Philippine Offshore Gaming Operators (POGOs) and the non-renewal of pre-pandemic leases, expansions from traditional and outsourcing helped mitigate the impact, preventing a sharper decline.”

Despite low completions during the year (70 percent drop in new supply), vacancy still reached a record high of 19.8 percent and is expected to peak further at 22 percent in 2025 due to carryovers.

Meanwhile, provincial office markets remained resilient, with sustained transaction volumes and a growing number of emerging locations gaining traction, signaling a shift in occupier demand beyond Metro Manila. 

“Colliers urges occupiers to capitalize on current market conditions to secure favorable lease terms. Landlords, meanwhile, should enhance the appeal of their spaces – especially those vacated by POGOs – to stay competitive in a tenant-favorable market.” Bondoc said.

On the other hand, the ready-for-occupancy (RFO) condominium market in Metro Manila also continues to face challenges. As of end-2024, total unsold condominium inventory in Metro Manila reached 74,400 units.

“But while it takes more than eight years to fully absorb the unsold units, it is important to highlight the fact that not all Metro Manila submarkets are affected by the overhang,” he noted. 

To address the oversupply issue, developers in Metro Manila continue to offer more attractive payment terms for pre-selling and RFO projects. 

“In our view, the interest rate cuts are a potential tailwind to the Metro Manila condominium market. Lower interest rates should result in lower mortgage rates, and these should complement the promos offered by developers,” Bondoc said.

About 26,300 of the unsold inventory in Metro Manila are classified as Ready-for-Occupancy (RFO) projects. Colliers recommends that developers with substantial number of RFO units offer more specific and curated programs as well as explore creative leasing models. 

“We have seen select developers such as Vista Land, SMDC and DMCI offering early move-in promos and discounts for their RFO units. 

These include up to 30 percent discount on Total Contract Prices (TCPs) for spot cash payment, rent-to-own promos, extended down payment terms of up to 48 months, and lower lump-sum amount before a buyer can move in.  Some developers are also offering free aircon and kitchen appliances,” he said.

Bondoc added that, “Colliers believes that geographic diversification is pivotal especially now that we are seeing a lukewarm appetite in the capital region. Resort-themed projects in Batangas, Benguet, Davao, and Cebu continue to perform well while some mid-income vertical projects outside Metro Manila are nearly sold out.”

Thus, he said property firms should highlight the proximity of their residential developments to game-changing infrastructure projects due to be completed in Metro Manila, such as the subway. 

These big-ticket public projects should play an important role in stoking demand in the capital region beyond 2025.