RESIDENTIAL real estate prices in Metro Manila are projected to increase by 2.2% annually through 2026, reflecting a “flattish recovery” amid the exit of Philippine Offshore Gaming Operators (POGOs), according to Colliers Philippines.
“Prices are likely to revert to pre-pandemic levels in the third quarter of 2029,” Joey Roi Bondoc, director and head of Research at Colliers Philippines, said during a briefing on July 31.
The Philippine residential segment will see elevated vacancies as POGOs are set to vacate the country by year-end, according to consulting firms.
Colliers forecasted that rents are set to grow by 1.6% annually from 2024 up to 2026 and will return to pre-pandemic levels in the second quarter of 2028.
“The growth of residential real estate loans is slowing down. From 2017 to 2019, which was a peak period for residential demand across the Philippines, especially in Metro Manila, demand was partly influenced by POGO demand,” Mr. Bondoc said.
President Ferdinand R. Marcos, Jr. has ordered a total ban on all POGOs due to their ties to illicit activities such as financial scams, money laundering, prostitution, and human trafficking.
Metro Manila central business districts currently have 159,000 condominium units as of the second quarter of 2024.
“Currently, vacancy is at 17.7%. With POGO demand, we’re likely to see that inching up to 25.4% by the end of 2024,” Mr. Bondoc said.
The Metro Manila vacancy rate will reach 24.9% in 2025, he said.
He added that for the Bay Area, where POGO employees and residents are mostly concentrated, vacancy is expected to surge to 55% from the current 28% without POGOs by the end of the year, and 53% in 2025.
Meanwhile, Leechiu Property Consultants, Inc. Founder and Chief Executive Officer David Leechiu said the residential sector’s high-end condominium market will continue to be resilient, but the middle market “will be hurt badly.”
He added that the middle market condominium will become cheaper to rent and will fall even faster and deeper than the office segment.
“I think what used to rent for P600 per square meter will very soon be renting for P300 or P250 per square meter in residential,” Mr. Leechiu told BusinessWorld.
POGOs will vacate a million square meters of residential space, he said.
“I think a lot of the consumer sector will also be impacted because these POGOs employ thousands of Filipinos that are local that have to submit their recordings, and then, now, it’s going to be harder,” he added. — Aubrey Rose A. Inosante
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The article was originally published in Business World.
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