How today’s trade war shapes Philippine real estate

President Donald J. Trump’s proposed “Liberation Day” tariffs — an across-the-board 10% levy and a targeted 245% tariff aimed at China — are both dramatic and entirely in line with his long-standing protectionist agenda. Whether these measures are ultimately enacted, softened, or abandoned, their announcement alone has rattled global markets and highlighted the fragility of international trade. For the Philippines, the implications go beyond macroeconomics — they are beginning to register across real estate, particularly within the industrial and office segments.

THE PHILIPPINES IS LEVERAGING TRADE INSTABILITY TO POSITION ITSELF AS A SECONDARY MANUFACTURING HUB

Although global trade volatility has revived fears about the long-term future of globalization, the Philippines is actively attempting to turn crisis into opportunity. The Philippine Economic Zone Authority (PEZA) has championed the country as a “China+1+1” destination — a fallback manufacturing location for companies moving beyond China and its first-wave alternatives like Vietnam and Taiwan. This positioning is already bearing fruit. In 2024, 95% of total foreign direct investment (FDI) in the Philippines went to manufacturing, and from 2021 to 2024, the sector posted a 38.63% compound annual growth rate.

STRUCTURAL CHALLENGES CONTINUE TO WEIGH DOWN THE PHILIPPINES’ MANUFACTURING INVESTMENT POTENTIAL

Yet this momentum comes with persistent obstacles. High electricity costs, regulatory friction, and unpredictable policymaking continue to hinder the country’s ability to fully convert investor interest into sustained industrial activity. According to the Department of Energy, the Philippines has the third highest industrial electricity rate in ASEAN — behind only Cambodia and Singapore. In 2024, the country ranked 49th out of 67 in the IMD’s global anti-red tape index and 114th out of 180 in Transparency International’s Corruption Perceptions Index, with a score of just 33. International trade agencies such as the US Department of State and Export Development Canada have also pointed to regulatory inconsistency and political uncertainty as deterrents to investment.

PHILIPPINE EXPORTS ARE 16.8% US-BOUND, HIGHLIGHTING VULNERABILITY BUT ALSO ROOM TO DIVERSIFY

Mr. Trump’s tariff rhetoric has also reignited fears among Philippine exporters. The US is the Philippines’ single largest export market, absorbing 16.8% of exports in 2024 — worth over $12 billion. While electronics dominate the basket (including integrated circuits and office machine parts), the US also buys substantial volumes of coconut oil, leather goods, and agricultural products. Should a proposed 17% tariff on Philippine goods materialize, it could create headwinds across numerous industries.

Still, the Philippines’ export portfolio is not overly concentrated. Japan (14.1%), Hong Kong (13.1%), and China (12.9%) closely follow the US, suggesting that smart policy and market development could help diversify demand and cushion shocks.

A PERSISTENT PRODUCTION SHORTFALL DRIVES THE PHILIPPINES TO IMPORT 7.2 MILLION METRIC TONS OF STEEL ANNUALLY

One of the less visible, yet highly consequential, ripple effects of the trade war is its influence on construction material costs — particularly steel. The Philippines produces just 1.5 million metric tons of crude steel annually, on average, according to the World Steel Association. Domestic output covers only a fraction of national demand, forcing the country to import around 7.2 million metric tons per year. Roughly 67% of these imports come from China, based on 2024 data from the Philippine Statistics Authority.

Meanwhile, China’s share of steel exports to the United States has fallen drastically — from 8% in 2014 to just 2.1% in 2023. With US tariffs pushing Chinese suppliers out of the American market, many of those exports may be redirected to Asia, including the Philippines. As a result, input costs for developers could soften despite global tension — especially for steel-intensive projects in industrial and infrastructure sectors.

WITH US STEEL IMPORTS FROM CHINA DOWN 75%, PHILIPPINE CONSTRUCTION MAY BENEFIT FROM REDIRECTED SUPPLY

Amid rising trade barriers, Chinese steel producers are likely to seek alternative destinations for surplus inventory. As US demand drops further under tariff pressure, the Philippines could benefit from excess supply. Given that 80% of the country’s steel consumption is used in construction, lower prices could directly reduce development costs — potentially accelerating project timelines and making new industrial zones more financially viable.

This is a key consideration in assessing industrial real estate’s medium-term outlook. Falling input costs may catalyze new warehousing, logistics, and manufacturing facility construction at a time when global investors are exploring alternative supply chain routes.

THE OUTSOURCING SECTOR IS PROJECTED TO GROW LESS THAN 7% IN 2025 AMID GEOPOLITICAL UNCERTAINTY

In the services sector, particularly in office real estate, the BPO industry faces its own set of pressures. While trade tariffs don’t directly affect services, the Philippines’ strong reliance on US clients exposes the industry to secondary risks. North America accounts for 70% of Philippine outsourcing demand. The sector also contributed $7 billion — or 9% of national GDP — and drove 19% of office demand in 2024.

IBPAP forecasts slower growth in 2025, with the sector expected to expand by less than 7%. While BPO will remain foundational to the office market, risks from reshoring (returning operations to the US) and nearshoring (relocating to nearby countries) will temper expansion. Still, the sector’s fundamentals remain intact, and strategic interventions can help maintain competitiveness.

LOWERING ELECTRICITY COSTS COULD UNLOCK BROADER INDUSTRIAL CAPACITY

One policy lever that could unlock multiple benefits is addressing energy affordability. In the short to medium term, the government could consider targeted subsidies for energy-intensive industries — especially manufacturing. In 2024, 70.9% of all energy investment pledges were committed to renewable energy. While this signals progress toward long-term sustainability, short-term competitiveness will require bridging the affordability gap.

Vietnam once implemented cross-subsidization mechanisms to keep industrial power costs competitive. Germany has proposed covering up to 80% of power costs for energy-heavy sectors like steel and chemicals. A similar intervention in the Philippines could attract more foreign manufacturers and alleviate cost pressures for domestic producers.

UPSKILLING AND POSITIONING THE PHILIPPINE WORKFORCE AS ‘AI-READY’ WILL SUSTAIN BPO SECTOR GROWTH

The BPO sector’s other challenge is technological disruption. But here, the Philippines shows promise. A 2024 Microsoft Philippines and LinkedIn study found that 86% of Filipino knowledge workers use AI at work — well above the global average of 75%. This positions the country not as a laggard, but as a potential leader in human-AI complementarity.

 By investing in AI upskilling and moving up the value chain — toward healthcare, finance, and analytics — the Philippines can future-proof its BPO sector. Rather than being displaced by AI, the workforce can evolve with it.

STRATEGIC FRICTION IS A TEST — AND AN OPENING

Trade wars are a symptom of a fractured global order, but they also expose underlying weaknesses — and hidden advantages. For the Philippines, the challenge is not only to weather the storm, but to position itself for what comes after. With the right supply-side reforms, forward-looking workforce development, and sector-specific interventions, the country can convert external turbulence into long-term opportunities.

Source: Business World

Why are you not wealthy yet?

Filipinos are among the most hardworking people in the world. We wake up early, hustle from job to job, send money to our families and even go abroad just to give our loved ones a better life. But despite all that effort, many still struggle to build lasting wealth.

The answer may not lie in how much we earn, but in how we think about money.

Many Filipinos fall into habits and mindsets that unknowingly sabotage our finances. These aren't just about poor decisions or lack of discipline. Often, they're rooted in cultural norms, emotional patterns and long-held beliefs that go unchallenged. If we want to change our financial future, we first have to recognize the hidden traps keeping us stuck.

One of the most common traps is the idea that as long as we have a job, we're financially secure. Earning money and building wealth are two very different things. Without savings, investments or a clear plan, that income can disappear quickly in an emergency. True financial security comes from what you keep and grow, not just what you earn.

Then there's the "I deserve this" mindset or "healing my inner child" which leads to lifestyle inflation. After receiving a salary increase or a windfall, many of us feel the urge to upgrade our lives — buying a new phone, eating out more often or booking a vacation we can't really afford. It's a way to reward ourselves after working so hard, and in many ways, we do deserve comfort. But when every increase in income leads to increased spending, we end up right where we started — broke, stressed and living beyond our means.

Another trap is the tendency to overextend ourselves for the sake of family. Supporting loved ones is noble, and helping each other is part of who we are. But there's a fine line between helping and sacrificing your own financial stability. When you're constantly bailing others out, you may end up needing help yourself. The best way to truly support your family long term is to ensure your own financial foundation is strong first.

Related to this is the "utang disguised as love" phenomenon. Filipinos are generous and loyal, especially when it comes to friends and family. When someone asks for a loan, we feel obligated to say yes, even if it means borrowing ourselves just to lend to others. Saying no feels like turning your back on someone. But true generosity doesn't require self-destruction.

Another common mindset is the fatalistic "bahala na" attitude. Many Filipinos leave their financial future to fate, hoping things will work out even without a concrete plan. But hope is not a financial strategy. Faith is important, but it needs to be paired with action. Having a small emergency fund, getting insured or creating a basic savings plan are small but powerful steps in the right direction.

On the flip side is the fear-based resistance to investing. Many Filipinos avoid anything related to stocks, mutual funds or financial instruments because of horror stories about scams or past mistakes. While caution is wise, fear can be paralyzing. Avoiding all investments due to one bad experience can keep you from opportunities that could grow your wealth. The key is to educate yourself, seek professional advice and start small. Investing doesn't have to be scary when you're informed.

Then there's the comparison trap, magnified by social media. You scroll through Facebook or Instagram and see friends posting about their new car, their out-of-town trip or their latest business venture. Suddenly, you feel pressured to catch up, to spend more, to show that you're not being left behind. This "sana all" culture fuels spending based on appearances rather than priorities. But your financial journey is not a race. Everyone's path is different. Peace of mind and financial security are more valuable than impressing others online.

At the core of these money traps is this truth: wealth-building isn't just about numbers, budgets or investments. It's about psychology, habits and awareness. Most of us don't realize we're trapped until it's too late.

The good news is it's never too late to change. Whether you're just starting your career or preparing for retirement, there's always time to shift your mindset. Ask yourself honest questions. Where is your money really going? What beliefs do you hold about money? Who are you trying to impress or save?

Once you see the traps, you can avoid them. Once you understand the patterns, you can break them. And once you take control of your mindset, you can finally take control of your money.

Source: Manila Times

Key trends shaping the 2025 office market

The Metro Manila office market navigated a challenging landscape in 2024, marked by high vacancy rates, shifting occupier strategies, and global economic uncertainties. As 2025 begins, key trends are emerging that could redefine demand dynamics, presenting both challenges and opportunities for occupiers and landlords alike.

US ELECTION SLOWS DOWN OFFICE LEASING IN Q4 2024

Metro Manila’s office market experienced a decline in transaction activity in the fourth quarter (Q4) of 2024, with total demand dropping to 143,000 square meters (sq.m.) from 192,000 sq.m. in the previous quarter. Colliers’ historical data show that demand typically dips by 30% during US election periods as occupiers delay leasing decisions, but rebounds by 40% in the following months as market confidence stabilizes.

Despite the temporary dip, expansions remained strong, signaling businesses’ confidence in the country. In 2024, expansions accounted for 56% of known transaction motivations, while 44% were relocations — primarily driven by cost-efficiency strategies and flight-to-quality movements. Traditional firms continued to be the primary demand driver, followed by third-party outsourcing (3PO) firms and shared services providers. Government agencies played a key role in traditional office space demand, accounting for 27% of total take-up.

The submarket dynamics in Metro Manila highlight the resilience of key business districts. Among Metro Manila’s submarkets, the Bay Area remained the most active, capturing 23% of total transactions, followed by Fort Bonifacio (18%) and Quezon City (17%). Key leasing transactions in the Bay Area were from government offices, while major sign-ups from multinational firms were seen in Fort Bonifacio, and expansions of IT-BPM firms were recorded in Quezon City.

POGO EXODUS’ IMPACT TO LINGER IN 2025

The lingering effects of the Philippine Offshore Gaming Operator (POGO) exodus weighed on the market, pushing Metro Manila into its first negative net take-up territory since 2021. In 2024, POGOs vacated 260,000 sq.m., and without the ban, net take-up could have remained positive at 215,000 sq.m.

The impact is most pronounced in POGO-exposed submarkets, particularly the Bay Area, Alabang, and Makati Fringe, where vacancy rates remain elevated. With the government’s continued crackdown on illegal POGOs, surrenders from these spaces will likely drive further increases in vacancy rates.

Despite these challenges, demand from other sectors has helped cushion the impact, with traditional firms, 3POs, and government agencies absorbing space. While the effects of the POGO exit will linger, ongoing transactions have prevented a worst-case scenario.

PROVINCIAL DEMAND REMAINS STRONG, DIVERSIFYING MARKET OPPORTUNITIES

Beyond Metro Manila, provincial office markets saw sustained demand, particularly from outsourcing firms. Cebu and Pampanga remained the top locations for provincial transactions, though Cebu recorded a year-on-year drop in volume — signaling possible market saturation of third-party outsourcing firms.

However, emerging office destinations such as Davao, Bacolod, Batangas, and Bohol saw a surge in demand, averaging a threefold increase in year-on-year transaction volume. Notably, some BPO players adapted to supply gaps by securing non-traditional spaces, such as Sagility’s lease within the redeveloped Tagbilaran Airport project. Additionally, newly built office buildings accounted for 60% of leasing activity, highlighting the need for high-quality, BPO-grade office spaces.

To capitalize on this trend, developers are encouraged to explore expansion in cities with limited office supply. Major developers such as Robinsons Land and Megaworld are already pivoting toward provincial growth with key projects in Iloilo, Bacolod, Bulacan, Davao, and Dumaguete. As more firms consider decentralizing operations, having high-quality office spaces will be critical in ensuring sustainable provincial market growth and attracting long-term occupiers.

WHAT TO EXPECT IN 2025

The office market is expected to remain tenant-leaning in 2025, as high vacancy rates persist due to non-renewals and carryovers from delayed construction of office buildings. However, early indicators from our Q1 2025 data suggest renewed leasing activity — particularly from 3PO firms in both Metro Manila and provincial locations — signaling a rebound in office demand.

Global economic conditions could further bolster the Philippines’ office market. With rising costs in key international markets, outsourcing remains a cost-effective strategy for multinational companies. The recent US tariff policies, as highlighted in our previous write-up, are expected to place additional cost pressures on US firms, making offshore solutions in the Philippines even more attractive. This trend could drive increased demand for office space, particularly from 3POs and shared services firms looking to expand their footprint in cost-efficient locations.

The passage of the CREATE MORE Act — particularly its provision allowing Registered Business Enterprises (RBEs) to implement up to 50% work-from-home (WFH) arrangements—will also play a crucial role in shaping office demand. In the short term, this policy may have varied effects: some firms may rationalize their office footprint, while others may see little to no change in their space needs as they are already compliant with the onsite requirement. However, in the long term, the clarity on hybrid work policies provides occupiers with a stable regulatory framework — reducing uncertainty and allowing companies to make more confident real estate decisions.

For tenants, current market conditions present an opportunity to secure favorable deals, while landlords must enhance their offerings to remain competitive. Landlords in the Bay Area, Alabang, and Makati Fringe — particularly those with aging buildings and spaces previously occupied by POGOs — will need to implement refurbishments, offer tenant improvement allowances, and introduce flexible lease structures to attract occupiers and mitigate vacancy risks.

Source: Business World