Property sector seen slowing in 2nd half amid oil, price pressures

The Philippine property sector is expected to slow in the second half as the Iran war, elevated oil prices and persistent inflation raise costs and weaken demand, prompting developers to delay projects and adopt a more cautious approach.

Analysts said higher fuel and construction costs, elevated borrowing rates and weaker consumer purchasing power are likely to weigh on residential, retail and hospitality segments through the rest of 2026, although industrial and outsourcing-related property demand might provide some support.

Joey Roi Bondoc, director for research at Colliers Philippines, said the impact of the war on fuel and supply chains could continue to pressure developers and buyers.

Developers have started delaying construction and marketing some projects in anticipation of weaker demand, he said.

“The Middle East covered about 18% of total remittances to the Philippines in 2025, so that is pretty significant,” he added.

Claro dG. Cordero, Jr., director for research at Cushman & Wakefield Philippines, said prolonged war in the Middle East would continue to affect oil markets even if tensions ease.

“Even if de-escalation occurs, oil production and trade through the Strait of Hormuz will take time to normalize,” he said in an e-mailed reply to questions.

He said higher oil prices would eventually filter through to transportation, utilities and consumer expenses, squeezing household purchasing power in a country heavily dependent on imports.

Cushman & Wakefield also said inflation risks could spur the Bangko Sentral ng Pilipinas (BSP) to keep benchmark interest rates elevated.

Mr. Bondoc said the BSP’s cumulative 200-basis-point policy easing has yet to translate into substantially lower mortgage rates.

“Until we see a significant reduction in mortgage rate, I think we won’t see a substantial spike in condominium take-up in the Metro Manila pre-selling market,” he said, noting that five-year mortgage rates remain at about 7.7% to 7.8%.

The condominium segment in Metro Manila continues to face a large supply overhang, with about seven years’ worth of unsold inventory, according to Colliers.

As a result, developers are increasingly shifting toward horizontal housing projects in provincial growth areas such as Cavite, Laguna and Batangas, where demand is driven more by end-users than speculative buyers.

“It doesn’t make economic sense at this point to start building more vertical projects in Metro Manila,” Mr. Bondoc said.

Colliers added that provincial house-and-lot projects continue to post strong average take-up rates of about 90%, partly because overseas Filipino workers are less likely to stop paying for homes occupied by their families.

Despite the challenges, analysts said some property segments are expected to continue performing well.

Mr. Cordero said logistics and industrial developments, information technology and business process management (IT-BPM) office spaces and the high-end residential market are likely to outperform.

“Logistics and industrial benefit directly from supply chain restructuring, as occupiers seek larger, strategically located warehousing near major transport nodes to guard against disruption,” he said.

He added that tighter budgets among global companies could still support Philippine outsourcing demand because firms continue to seek lower-cost operating locations.

John Corpus, executive director for tenant representation at Savills Philippines, said a weaker peso could further improve the country’s competitiveness for export-oriented industries and outsourcing firms.

However, he noted that many business process outsourcing firms and global capability centers remain cautious about expansion because of economic uncertainty and rapid technological change.

“As a result, occupiers are expected to remain selective and strategic in their expansion decisions,” Mr. Corpus said.

Savills also cited geopolitical risks involving Taiwan and domestic political uncertainty ahead of the 2028 election cycle as factors that could affect investor sentiment.

“Investors generally prefer stability, policy continuity, and a strong focus on economic priorities,” Mr. Corpus said.

Analysts said developers should prioritize operational efficiency and carefully phase projects instead of pursuing aggressive expansion.

They also recommended locking in material costs early and investing in energy-efficient infrastructure and renewable energy systems to reduce operating costs for tenants.

Source: Business World

Manila hotel sector may expand by nearly 2,900 keys this year — Colliers

Metro Manila set to add 2,890 hotel keys in 2026, with most of the new rooms concentrated in Makati and the Bay Area, according to Colliers Philippines.

In its Second-Half (H2 2025) Metro Manila Hotel Report, Colliers projected that over two-thirds of the new supply this year will come from hotels in the Makati central business district and the Bay Area.

“The Philippines recorded dismal aggregate international arrivals in 2025. The country has yet to recover pre-covid visitors. Despite this, domestic travelers continue to drive take-up for hotels and MICE (meetings, incentives, conferences, and events) facilities across the country,” Joey Roi H. Bondoc, director and head of research at Colliers Philippines, said in the report.

From 2026 to 2029, Colliers projects 1,800 rooms to be delivered annually. About 52% of the new supply in Metro Manila during this period will come from foreign hospitality brands such as Mandarin, Dusit, Canopy, and Moxy.

Colliers expects hotel occupancy this year to reach around 60%, amid the addition of new rooms and limited international arrivals.

The consultancy noted that the Philippines’ tourist arrivals remain “disappointingly low,” as neighboring countries such as Vietnam and Malaysia have exceeded their pre-pandemic visitor levels.

Tourist arrivals in the Philippines reached 6.48 million in 2025, according to the Bureau of Immigration, below the pre-pandemic level of 8.26 million in 2019.

The country has faced challenges in attracting international visitors compared with regional peers, amid congested airports, limited inter-island connectivity, and underdeveloped transport infrastructure.

Domestic travelers continue to influence hotel occupancy and daily rates, particularly in Metro Manila, Cebu, Cagayan de Oro, Davao, and Clark, Pampanga.

The hosting of the ASEAN Summit this year is expected to support the country as a MICE destination, Colliers added.

In-person events such as pharmaceutical product launches, property exhibits, bridal fairs, technology trade shows, and travel and tourism expos can further support MICE and accommodation demand, the report said.

“In our view, the government should focus on expanding and diversifying the Philippines’ leisure demand base, with some countries from Europe and the Middle East being the ‘low-hanging fruits,’” Colliers said.

Hotel operators are advised to target long-haul and high-spending tourists, noting that new international flights have been introduced from countries such as Russia, Palau, Canada, and India.

Developers are encouraged to consider an “asset-light strategy” for hotel expansion, Colliers said.

“This model allows foreign brands to enter into management or franchise contracts with local developers, reducing capital expenditure while providing stable, predictable returns for property owners, creating a mutually beneficial arrangement for both parties,” it said.

Hotel joint ventures that have adopted the “asset-light” model include partnerships between The Ascott Limited and DoubleDragon Corp., and between Ayala Land Hospitality with Marriott International, Inc. and Hilton Worldwide Holdings, Inc.

Developers should also take advantage of new policies that could support tourism growth, including the issuance of digital nomad visas, the Cruise Visa Waiver Program, and visa-free entry for Indian and Chinese tourists, Colliers said.

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Source: Business World

Colliers says housing prices may have recovered in Q4

Residential property prices may have picked up in the fourth quarter after the slump a quarter earlier, Colliers Philippines said.

“Similar to what we have seen previously, the fourth quarter is traditionally a strong quarter for residential take-up whether within or outside Metro Manila, whether it’s condominiums or horizontal,” Joey Roi H. Bondoc, director and head of research at Colliers Philippines, said.

The Bangko Sentral ng Pilipinas (BSP) Residential Property Price Index indicated that housing prices nationwide posted its weakest growth ever in the third quarter at 1.9%.

This was a sharp slowdown from the 7.5% growth posted in the three months to June and the year-earlier 7.6%.

The BSP also reported that lower real estate investment brought banks and trust entities’ real estate exposure down to 19.54% at the end of September from 19.61% at the end of June and 19.55% a year earlier.

Real estate loans climbed 8.9% year on year to P3.096 trillion at the end of September, but real estate investment slipped 5.75% to P354.749 billion.

Mr. Bondoc said yearend bonuses and inflows of remittances from overseas Filipino workers could have spurred demand for residential property in the fourth quarter.

He also noted that the peso’s recent weakness may prompt migrants, especially those from North America, to send more money home.

The peso has been trading between P58 to P59 to the dollar since October, hitting a fresh record low of P59.22 on Dec. 9.

However, Mr. Bondoc said elevated mortgage rates may still continue to dampen housing price growth in the near term, but any potential rate reduction could help property take up and price growth by this quarter next year.

“I think we need to watch out for the… possible reduction in mortgage rates, given that there has been a substantial decline in basic policy rates by the central bank,” he added.

“And if that happens, that will provide a better impetus for a spike in residential demand, and therefore residential prices, starting (in the) first quarter of 2026.”

The BSP ended the year with a fifth straight 25 basis-point (bp) cut on Dec. 11, bringing its total reductions on key borrowing costs to 200 bps since August 2024. The benchmark policy rate is currently at an over three-year low of 4.5%. 

Mr. Bondoc said lowering the mortgage rate between 6% and 6.5% from the current 7.8% could help the property industry by raising confidence among buyers.

“But the concern is that they have not been lowering their mortgage rates,” he added. “If they start doing that next year, 2026, I think (that will be) a very good sign that demand and then prices might recover faster because of this lower mortgage rate.”

Source: Business World