Condo living

The daily newsletter I get from a stock market analyst reported that "According to Leechiu Property Consultants (LPC), there is now an oversupply of 29 months' worth of condominium units in Metro Manila." Leechiu explains the situation is "due mainly to the high interest rates and external risks along with a shift in buyer preferences."

- BOO CHANCO

Specifically, LPC said "there are currently 67,600 units across 510 actively selling buildings in Metro Manila, the highest since the COVID-19 pandemic. Quezon City has the biggest number of available units with 18,500; followed by Ortigas with 13,500; the Bay Area in Pasay with 10,500; Manila with 8,500; and Caloocan with 8,100."

I assume the inventory will be higher after December 31, the day POGOs are supposed to close according to BBM's order.

A condo glut is inevitable. Property developers remind me of the "hot pandesal" craze when I was growing up. When someone puts up a hot pandesal business in a neighborhood, two or three more will do the same. Property developers are not thinking of an end user occupying those units when they build them.

Condos are being built and sold as a place to park excess cash. Developers are focused on those able to buy residential units priced between P700,000 and P900,000 per sqm with a total contract price (TCP) ranging from P200 million to about P500 million per unit or even more.

During the pandemic, the high-end segment exhibited resilience. While prices in affordable to lower middle-income residential segments corrected, demand and prices in the luxury and ultra luxury segments held firm. But buyers are also speculators selling to each other in the secondary market. This can't go on forever.