POST-PANDEMIC CONSUMER CONSERVATISM LED TO CONDO OVERSUPPLY

By Mark Ferry John A. Lamsen, 13 December 2024, 9:03 pm

 

It was published in the online platform of GMA Integrated News about the oversupply of condominium units in Metro Manila, citing a record 34 months’ worth of oversupply (Metro Manila condo oversupply now equivalent to 34 months | GMA News Online)

 

I completely agree with the opinion of the property consultancy firm cited in the report. What I do not agree is the conclusion of some people, especially brokers and agents, that there is now a property bubble – I think all other property experts will agree with me that there is no property bubble – yet.

 

The oversupply of condo units even from big-time property developers stems from the people’s experience from the global pandemic – in times of great distress, where people cannot go elsewhere, it’ll always be best to have some real cold cash at hand. The community quarantines imposed by the government during that 3-year span of COVID-19 pandemic would prove the undersigned RIGHT in what I said.

 

Yes, real property investments can indeed beat inflation in the long run, and will always be a great course of action whenever one plans to accumulate wealth in the long run. But THAT long run assumes a steady economic growth – one that doesn’t count “acts of God” like the pandemic.

 

Based on personal observation, our country’s economic cycle runs on 11 years. The EDSA People Power revolution of 1986 somehow shakes our economy for around 6 months (per newspaper clips I read about that). Eleven years after, we have the Asian financial crisis of 1997, crashing Asian markets that lasted until the early part of 1998. Then we have the 2008 global economic crunch fueled by property bubble in the US, affecting the Filipino expats who bought properties in the Philippines thru their dollar remittances. That global crunch lasts until the end of 2009. Then, we have the 2020 COVID-19 pandemic, 11 years after. We endured community quarantines until the earlier part of 2022, though the effects were extremely felt until the first quarter of 2023. All these incidents lead to economic uncertainty of the times, even after careful planning by the so-called think tanks and experts.

 

Let’s talk about the recent pandemic. Because of the imposed quarantines, one thing people from almost all walks of life knew one basic thing, aside from having a deep faith in God – CASH IS KING (one basic principle of financial management). You cannot go outside, then order online. Under economic “duress”, buying basic necessities is much valuable than investing in condo units. Even those who have fat paychecks would now thick twice or thrice before buying mid-income condo units in prime areas – making them investment conservatives rather than market aggressives – knowing fully well that the uncertainty such as the global pandemic may happen again. This time, maybe it will no longer be within that 11-year cycle, maybe it’s shorter this time (the term “uncertainty”).

 

STILL, I would not conclude there will be bubble – for now. As they say, there are many ways to skin a cat. There are MANY ways to speed up the consumption of these oversupply of condo units – only that it will take a somewhat herculean effort on the part of the developers to execute the ways that I am thinking. This condo oversupply can still be solved. Forget the naysayers.

 

I’m not telling this because I sell condo units. On the contrary, my listings posted here in this website are mostly commercial properties, not retail residential condo units. But believe me, there are still many ways to solve this oversupply. It’s up to the great minds of the people working under these property companies to find those ways. I personally know some of these – a combination of strategies that will entice people to buy these units post-pandemic. I will just hold my cards for now.

 

Condo investment is still one of the best ways to accumulate wealth, matter-of-factly.