THE VACANCY RATE for residential property in Metro Manila will likely hit up to 18% in the first quarter of 2024 due to the sizable completions of new condominium units, Colliers Philippines said.

“Residential vacancy definitely will not drop below 17%. Between 17.5-18%, that’s the vacancy that we’ll likely see for the first quarter of 2024,” Colliers Philippines Research Director Joey Roi H. Bondoc told BusinessWorld on the sidelines of a briefing last week.

“You still have sizable number of completed units on the market so it will take time before the vacancy drops,” he added.

According to Mr. Bondoc, there is a “lukewarm demand” in the pre-selling or primary market due to higher interest rates and mortgage rates which discourage investors to buy completed condominium units.

“Let’s see if the central bank signals or cuts interest rates starting second half of this year. That will likely result in lower mortgage rates, but even if that happens, we’re only likely to see marginal improvement because we don’t see a drastic interest rate cut from the central bank,” he said.

In December, the Bangko Sentral ng Pilipinas kept its policy rate unchanged at 6.5% for a second straight meeting after the 25-basis-point (bp) off-cycle hike in October.

It had raised borrowing costs by a total of 450 bps between May 2022 and October 2023.

In a BusinessWorld poll of 17 analysts last week, 15 analysts expect the Monetary Board to maintain its target revenue repurchase rate at 6.5% this week.

“If they implement such a cut, it will definitely be marginal and it will not have substantial impact on the take-up of these completed condominium units in Metro Manila,” Mr. Bondoc said.

In a report, Colliers said that the vacancy in the secondary residential market dropped to 16.8% as of end-2023 brought by the improved vacancies across all sublocations.

The property consultancy firm recorded a take-up of about 23,400 condominium units in the National Capital Region (NCR) pre-selling market, an improvement from the 21,600 units sold in 2022.

It is expecting completion of more than 7,000 new condominium units this year.

“Vacancies, slow tempered launches, and then marginal correction in rents and prices — that might still happen for 2024, especially given on these significant number of condos to be completed this year,” Mr. Bondoc said. — Sheldeen Joy Talavera