The Philippines is moving toward a predominantly urban society

Global urbanization is entering a slower but more complex phase, and the Philippines is moving steadily toward a predominantly urban society that will be shaped by how well it manages its fast-growing cities. The World Urbanization Prospects 2025 (WUP 2025) combines new satellite-based data on built-up areas with improved population modeling, giving a sharper picture of where and how people are concentrating in cities, towns, and rural areas worldwide.

What WUP 2025 shows globally

WUP 2025 confirms that the share of people living in urban areas continues to rise, but the speed of urban growth is slowing compared with the explosive expansion of the late 20th century. Growth is increasingly concentrated in low- and middle-income countries, especially in Asia and Africa, where a relatively small group of countries will account for most of the increase in city dwellers to 2050.

A major innovation in WUP 2025 is its harmonized “Degree of Urbanization” approach, which classifies cities, towns and rural areas using consistent thresholds for population density, size, and contiguity instead of relying solely on differing national definitions. This revision expands coverage to more than 12,000 urban centers of at least 50,000 inhabitants, allowing more granular estimates of city growth and the links between population, land use and built-up expansion.

Urbanization trends that matter

Several global patterns stand out. Cities’ built-up footprints have expanded roughly twice as fast as the world’s population since the 1970s, which means many urban areas are growing outwards faster than they are growing upwards, with implications for transport, infrastructure costs and environmental pressure. At the same time, many countries are seeing the emergence of dense small and medium cities that absorb much of new urban growth, rather than only a handful of megacities.

Future global urban growth will be heavily concentrated: just a few countries will account for over half of the nearly 1 billion additional city residents expected between 2025 and 2050, led by India, Nigeria, Pakistan and others in Africa and South Asia. This concentration raises the stakes for planning, since decisions in these rapidly urbanizing countries will strongly influence climate risk, resource use and inequality worldwide.

Where the Philippines is today

According to recent estimates that draw on the WUP series, around half of the Philippine population is now urban: about 49 to 50 per cent, or roughly 57 to 58 million people out of a total population of around 117 million in 2025. Urban growth remains positive but moderate, with annual urban population growth reported at about 1.5 per cent in 2024, which is faster than urban growth in many high-income countries but slower than in some of the fastest-growing African and South Asian nations.

The country’s urban system is dominated by the Manila urban agglomeration, whose wider built-up metropolitan area is estimated in the mid‑2020s at over 15 million residents, making it one of Asia’s largest megacities. But WUP 2025’s lower 50,000‑person threshold also highlights the growing importance of secondary and emerging cities across Luzon, Visayas and Mindanao, many of which are expanding in population and land area even if they remain far smaller than Metro Manila.

Snapshot: global vs Philippines (circa 2025)

Indicator (approximate)	World (2025)	Philippines (2025)
Urban share of population	About 56–60% living in urban areas.	About 49–50% living in urban areas.
Urban population growth	Slowing globally but still positive, concentrated in Asia and Africa.	Urban growth around 1.5% per year (2024 data as latest benchmark).
Settlement pattern	Rapid expansion of built-up areas, many small and medium cities growing.	One dominant megacity region (Manila) plus a network of fast-growing regional cities.

Key messages for the Philippines

First, the Philippines is on track to become predominantly urban in the coming decades, so planning for an urban majority is no longer optional; it is a demographic certainty. This means national and local policy must treat housing, transport, water, and social services in cities as core development priorities rather than afterthoughts, especially as climate risks like flooding and heat are amplified in dense urban environments.

Second, the pattern of growth matters as much as the pace. WUP 2025’s evidence that global built-up areas are expanding faster than population suggests the Philippines faces real risks from unmanaged sprawl around Metro Manila and other rapidly urbanizing corridors. Compact, transit‑oriented development, strict protection of high‑risk zones, and better coordination between land-use and infrastructure planning will be essential to avoid locking in congestion, high transport costs and vulnerability to disasters.

Third, secondary cities are an opportunity. With WUP 2025 now tracking thousands of smaller urban centers, the data underscore that dispersing economic growth into well‑connected regional hubs can ease pressure on Manila while improving access to jobs and services outside the capital. Strategic investment in mid‑sized Philippine cities—particularly in resilient infrastructure, digital connectivity and human capital—can create alternative growth poles that absorb population growth more sustainably.

Finally, urban policy and climate policy are increasingly the same agenda. The concentration of people and assets in Philippine cities means that progress on emissions reduction, climate adaptation, and disaster risk management will depend on how urban expansion is guided and how existing neighborhoods are upgraded. Using the richer spatial and demographic detail of WUP 2025 alongside national data can help identify hotspots where investments in resilient, inclusive urban development will yield the greatest long‑term dividends.

Source: Ziggurat Real Estate

Philippines targets 4.3% of GDP for infrastructure spending in 2026

The Department of Budget and Management (DBM) cut its infrastructure spending target to 4.3% of gross domestic product (GDP) this year from 5.1% previously, as a corruption scandal weighed on government spending and economic growth last year.

The lower target translates to about P1.3 trillion in infrastructure outlays, Acting Budget Secretary Rolando U. Toledo said on Tuesday, signaling a more cautious spending stance as the government works to restore confidence and streamline disbursements.

“Based on our approved General Appropriations Act, we’re looking at achieving our infrastructure target as [a percentage of our] GDP at 4.3%, and even at a nominal level, that is equivalent to P1.3 trillion,” he told a Palace briefing in mixed English and Filipino.

Infrastructure spending has been a key pillar of President Ferdinand R. Marcos, Jr.’s growth strategy, though execution slowed last year due to budget adjustments and project bottlenecks amid a massive graft scandal involving flood control projects.

The government had earlier set a target of 5.1% of GDP for infrastructure spending in 2026, equivalent to P1.56 trillion, lower than the 2025 target of 5.3% of GDP or P1.51 trillion.

In 2024, infrastructure spending accounted for 5.8% of GDP or P1.545 trillion.

Mr. Toledo said the government is still determined to boost investments in infrastructure in the medium term.

He said there is little risk of delays in infrastructure projects this year, after a “clean” budget process.

“There is no reason for us to delay,” Mr. Toledo said, adding that the 2026 national budget contains no “ghost projects” and that allocations across programs are fully specified, supporting the government’s ability to meet its infrastructure goals.

Mr. Marcos on Jan. 5 signed a record P6.793-trillion national budget amid a graft scandal, which has prompted tighter scrutiny of public spending and a more cautious approach to the release of funds for infrastructure and other major projects.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said slower public works spending may temper economic momentum because infrastructure has one of the highest multiplier effects in the economy.

“It may cap growth momentum, as public works have one of the highest multiplier effects in the economy,” he said via Viber.

“The more cautious stance may help restore governance credibility, but it also means less crowding-in of private investment, weaker job creation in construction and allied sectors, and slower productivity gains,” he added.

Economy Secretary Arsenio M. Balisacan last week said economic growth in the Philippines likely eased to between 4.8% and 5% in 2025, reflecting the impact of the graft scandal on the economy.

The Philippine Statistics Authority is set to publish official fourth-quarter and full-year 2025 GDP figures on Jan. 29.

Without faster execution, improved project selection, or stronger private investment to offset the slowdown, the Philippines’ economic growth could fall short of its potential even as confidence gradually improves, Mr. Rivera said.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said higher government spending — particularly on infrastructure — is likely to be the primary driver of economic growth in 2026.

He expects authorities to accelerate public works as early as the first quarter to make up for underspending last year, which he said was partly due to tighter anti-corruption measures and governance reforms.

A catch-up spending program could help bolster investor confidence and sentiment, Mr. Ricafort said, reinforcing the growth outlook.

He said prospective interest rate cuts by the US Federal Reserve and the Bangko Sentral ng Pilipinas would lower borrowing costs, supporting credit demand, investment and overall economic expansion.

Source: Business World

Metro Manila rental yields may stay flat in 2026

Rental Yields in Metro Manila’s residential market are expected to remain flattish next year amid weak investor demand and lingering condominium oversupply, property consultants said.

“Yields will likely remain flat for the year 2026, with core central business districts (CBDs) recovering faster,” Roy Amado L. Golez, Jr., director for research, consultancy, and valuation at Leechiu Property Consultants (LPC) said.

“Rents in Bonifacio Global City and Taguig have already exceeded pre-pandemic numbers, while other locations remain at a significant discount. This situation will persist until supply is taken up,” he said.

Joey Roi H. Bondoc, director and head of research at Colliers Philippines, said rental yields will likely stay flattish next year as residential demand is driven mainly by end-users rather than investors.

“I think one reason why the ready-for-occupancy promos, for example, of certain developers are working is because the demand is actually end-user driven,” he said in a phone interview.

In Metro Manila, residential rental yields averaged 4.1% in the primary market, or properties sold by developers to end-users, LPC said in its fourth-quarter property market report.

Meanwhile, secondary market yields — which cover pre-owned units offered for sale or for rent by their owners — averaged 4.8%, based on LPC data.

“Secondary market units will continue to generate higher yields versus primary market units, since buyers will be acquiring units from sellers who bought these units at much lower prices,” Mr. Golez said.

Mr. Bondoc added that Metro Manila’s primary residential market continues to face an oversupply of 30,400 unsold units, equivalent to about eight years’ worth of inventory.

Most of the region’s condominium inventory falls under the affordable to lower middle-income segment, with units typically priced between P2.5 million and P6.99 million, Colliers data showed.

“Current prices of condominiums are on the high side, and with challenging rents, this results in lackluster yields. To boost rental yields, prices should remain flat — since we don’t really see widespread price cuts — to allow the market to catch up,” Mr. Golez said.

Joe Curran, chief executive officer at Savills Philippines, expects rental yields in the region to be “broadly stable to slightly firmer” next year, at around 4% to 6%.

He said lower interest rates, return-to-office mandates, and the long-term stay of expatriates and students could help lift rental demand in Metro Manila’s residential market.

To improve rental yields, developers should adopt a more disciplined launch pipeline for condominium projects, Mr. Curran said.

He also cited the need for stronger marketing and proactive maintenance to make unsold condominium units more attractive for leasing.

“While Metro Manila stock continues to grow, supply that remains aligned with genuine end-user and rental demand should support stronger pricing power over the medium term,” Mr. Curran said in an e-mailed reply to questions.

For 2026, Colliers projects residential vacancy to ease to 26% from 26.5% as of end-2025, as developers slow the launch of residential projects in Metro Manila.

Source: Business World