[Expert Insights] Jet Yu on the Metro Manila Condo Oversupply

In a recent data-driven appearance on ABS-CBN News Channel’s Market Edge, our Founder and CEO, Jet Yu, sat down with Michelle “Mimi” Ong to address the growing discourse surrounding the "condo crisis" in the Philippines. While headlines often paint a picture of a total market collapse, Jet clarifies the nuances of the current Metro Manila condominium oversupply and where the industry is truly headed.

Is there a "Condo Crisis"? A Localized Reality Check

The narrative of a city-wide property glut is often oversimplified. According to PRIME Philippines' latest research, the oversupply issue is highly localized rather than a regional epidemic.

"The issue is not really a Metro Manila-wide oversupply crisis," Jet explained. "It is localized to a few cities and specific areas where the exit of POGO tenants has left a significant gap in occupancy."

The Affordability Gap: The True Driver of Vacancy

Jet Yu highlighted that the real challenge facing the market is not just the volume of units, but a widening affordability gap. While household incomes have grown steadily, condominium prices have surged by nearly 300% over the last decade.

Key factors impacting investor returns today include:

• The 12% VAT Impact: Once a unit is leased, it becomes subject to VAT, significantly affecting net yields.

• Zonal Value Mismatch: With BIR zonal values currently sitting 20–30% above actual market values, many investors are facing "sacrifice sales" to exit underperforming assets.

A Shift in the "Golden Era" of Yields

Reflecting on the market's evolution, Jet noted that the period between 2011 and 2015 was the "Golden Era" of condo investing, with yields peaking at 10%. Today’s market is undergoing a healthy correction, settling into global norms of 2% to 4% yields—similar to trends seen in mature cities like Toronto and Vancouver.

Beyond Residential: The Rapid Rise of Industrial Real Estate

While the residential sector corrects, the industrial and logistics segment is emerging as the market's most resilient pillar.

• Surging Demand: Driven by the e-commerce boom, industrial stock has grown to 40 million square meters.

• Grade A Scarcity: There remains a critical shortage of high-quality (Grade A & B) warehousing, leading to a massive increase in built-to-suit (BTS) logistics facilities.

Eastwood’s "Last Gem": A Prime Development Opportunity

To close the discussion, Jet introduced a rare opportunity along the C5 corridor: a 1.5-hectare prime lot located beside Eastwood City.

As one of the final remaining large-scale development sites in the area, the property offers:

• Strategic Pricing: At PHP 250,000 per sqm, it stands as a competitive alternative to nearby developments where prices exceeded PHP 300k as early as 2019.

• High-Density Potential: Zoning allows for building heights of up to 50 storeys, making it an ideal site for developers looking to shape the future skyline of Quezon City.

CEO’S Final Word to Investors

"If you can hold, you hold," Jet advises. With the expansion of the Metro Manila Subway and continued infrastructure development, the current correction is a phase in a larger, stable cycle. At PRIME Philippines, we remain committed to providing the data-driven insights necessary to navigate these shifts. Watch: Jet Yu of Prime PH reveals truth behind metro condo crisis, rise of industrial sector | ANC