$2.6-billion worth of condo units unsold in Manila: ‘Fire sale’ discounts on
34-month oversupply leads to ‘silent fire sale’ strategies across the market
Manila: Buying a condo unit in Manila? There’s a good chance you could get up to 25 per cent discount from developers, especially if you buy cash and haggle right.
The reason: Developers are more willing to cut prices as the condo supply glut grows.
Even if you buy via bank mortgage, then make sure you ask for extended downpayment terms. And there could still be outright discounts amounting to thousands of dollars.
How is this possible?
Oversupply
The housing oversupply in the capital Manila has reached 34 months as of November, according to latest data from Leechiu Property Consultants (LPC).
This marks a sharp increase from 29 months recorded in the third quarter.
Roy Golez Jr., LPC’s Research and Consultancy Director, noted that while 4,000 new units were added and sold in the period, 6,000 “backouts” – buyers who did not complete their purchase – caused the surge in inventory.
The surplus has forced property developers to quietly reduce prices on unsold units.
‘Silent fire sale’
Industry experts describe this as a “silent fire sale,” as significant discounts are being offered to preferred clients, repeat buyers, and bulk purchasers.
Santos Knight Frank Director Lovelle Taleon explained that developers are avoiding public promotions of the aggressive price cuts to prevent "market instability".
LPC’s October property market report showed that the inventory of unsold condo units has reached a staggering 67,600 units across 510 buildings – the highest level since the pandemic.
In November, the number spiked: Insiderph reported that Metro Manila's condo glut is now equivalent to Php154 billion ($2.6 billion) in unsold units.
Time to buy?
Jovi Tupaz, a Philippine Professional Regulation Commission (PRC)-licensed consultant, said the glut was fuelled by the previous boom.
That’s when developers built an insane number of units in the National capital region (NCR, with 16 cities, of which the City of Manila forms a part) – anticipating prolonged high demand.
Meanwhile, prices have more than doubled in the last 10 years or so, driven by pre-pandemic market: Off-plan prices for a standard 1-bedroom unit in Manila (22 to 30 sqm), have more than doubled, from Php2.4 to Php3 million, to the current Php6 million pesos.
A confluence of factors, including the pandemic, the shutdown of offshore gaming industry known as POGOs, and higher interest rates, left many units vacant in certain areas. Poor planning by some developers, too, contributed in part to the oversupply situation.
“(For end-users) it’s a good time (to buy) if you are looking at personal residence,” said Tupaz. “If you find a good deal and based on your purpose, you definitely need to buy and hold for at least three years, to see what happens.”
Who is giving discounts?
Tupaz added that certain developers would be more willing to give discounts, but pointed out that there are more nuanced market dynamics involved.
“The bigger developers can just wait it out, and use extended payment terms,” he added.
Now, major developers are scaling back on new residential launches.
DMCI Homes, for example, will not launch new projects in the first half of 2025 as it focuses on clearing existing inventory.
High rates
The condo glut is compounded by high interest rates – despite the 50 basis points cut by the Monetary Board in the second half of 2024.
The Bangko Sentral ng Pilipinas (BSP) raised its benchmark rate to 6.5 per cent in late 2023 before lowering it to 6 per cent in October 2024, but cautious buyers remain wary.
Despite challenges, developers are optimistic that continued interest rate reductions will revive demand, especially in mid-market and affordable housing segments.
As the peso dives ($1=Php58.40 as of Monday as per BSP’s reference rate bulletin), demand from overseas Filipino workers (OFWs) could also help absorb some of the supply as end-users or investment, hoping for a market turnaround some time in the future.
Under Philippine law, foreigners are also allowed to own 100 per cent of condominium units.