Colliers reported that vacancies in the NCR secondary market rose slightly to 24.3% in the 1st quarter (1Q) 2025, and they expect this number to rise further to 26.0% as more projects get delivered. As a result, Colliers also projects that rental rates will likely correct by around 1.0-1.5% this year, which will likely continue to put off investors in the mid-income segment. However, they remain optimistic that further interest rate cuts and demand from OFWs should underpin the segment. <\/p>\n\n\n\n
Given the continued headwinds in the middle-income segment, we maintain our preference for developers who specialize in higher-value segments and who have reported residential revenue growth last quarter despite all odds. With this in mind, we reiterate our BUY call on ALI and MEG.<\/p>\n\n\n\n
Ayala Land, Inc. (ALI) \u2013 Buy, Target Price of P42.01<\/strong><\/p>\n\n\n\n Megaworld Corp. (MEG) \u2013 Buy, Target Price of P2.37<\/strong><\/p>\n\n\n\n Data from Colliers Philippines showed that net take-up of residential units in 1Q 2025 reached only 89 units, with 4,746 backouts nearly canceling out the 4,835 take-ups. Launches, on the other hand, reached around 5,300 units \u2013 the highest recorded number of quarterly launches since 3Q 2023. Among the notable launches this quarter include ALI\u2019s Avida Towers Makati Southpoint Tower 3 in Makati, HOUSE\u2019s Urban Deca Tondo Building 7 in Manila, and the SHNG-RLC joint venture Haraya Residences \u2013 North Residences in Pasig.<\/p>\n\n\n\n Despite the slight uptick in launches this quarter, this is still historically weak compared to the pre-pandemic boom days. We see this as a concerted effort on the part of developers to ease inventory pressures, as they instead focus on selling off their current stock of units. To aid in this, we are now seeing more aggressive marketing, RFO and rent-to-own promotions, as well as extended payment schemes. They are also likely banking on the upcoming boost in demand as the BSP continues to lower benchmark interest rates.<\/p>\n\n\n\n Unsurprisingly, we only saw positive net take-up in the ultra luxury and upper luxury segments, as the top 1% proves to be as resilient as ever to economic shocks. The take-ups in these segments are also mostly concentrated in prime hotspots like Makati CBD and BGC. On the other hand, we saw the highest number of cancellations and biggest net negative take-up in the middle-income segments. These are segments where the buyers are typically \u201cinvestors\u201d who are looking to rent out the units, so rising vacancies and falling rental rates are likely the biggest factors for their cancellation. On the other hand, we also saw net positive take-up in the economic and affordable segments, where buyers are typically end-users who intend to actually live in the units that they buy.<\/p>\n\n\n\nResi market records net take-up of 89 units in 1Q 2025<\/h3>\n\n\n\n
Developers hold off launches to ease inventory pressures<\/h3>\n\n\n\n
The upper crust is as resilient as ever<\/h3>\n\n\n\n