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

Lower Interest Rates and Stronger Manufacturing Activity Could Revive Philippine Property Demand

The Philippine property market may be entering a new phase of recovery. After several years of elevated borrowing costs, cautious consumer spending, and economic uncertainty, recent developments suggest that conditions are becoming more favorable for both homebuyers and property investors.

Two important trends are attracting attention across the real estate sector. First, expectations of lower interest rates are improving affordability for buyers seeking housing loans. Second, stronger manufacturing activity indicates growing business confidence and economic expansion. Together, these developments could help stimulate demand across residential, commercial, industrial, and mixed-use property markets.

For buyers, investors, and developers, the coming months may present opportunities that have not been seen since before the period of aggressive monetary tightening.

Why Interest Rates Matter to Real Estate

Interest rates have a direct impact on property affordability. When rates rise, monthly mortgage payments increase, reducing the purchasing power of buyers. When rates fall, financing becomes more accessible, allowing more households to qualify for housing loans and enabling investors to pursue larger acquisitions.

Over the past few years, many prospective buyers delayed property purchases due to higher financing costs. Developers also faced challenges as consumers became more cautious about taking on long-term debt.

A lower interest rate environment changes this equation. Reduced borrowing costs can encourage first-time homebuyers to enter the market, motivate existing homeowners to upgrade their properties, and support investor demand for residential and commercial assets.

Historically, periods of declining interest rates have often coincided with stronger real estate activity, particularly in growing urban centers.

Manufacturing Growth Signals Economic Confidence

While interest rates attract much of the attention, manufacturing activity may be an equally important indicator for the property market.

A growing manufacturing sector typically reflects stronger business confidence, increased production, and expanding employment opportunities. When factories increase output and businesses invest in new facilities, the effects extend well beyond the industrial sector.

Workers gain income, businesses require additional office and warehouse space, and communities surrounding industrial zones experience increased economic activity. These developments create demand for housing, retail centers, logistics facilities, and supporting infrastructure.

As manufacturing strengthens, property markets often benefit from the resulting job creation and economic growth.

Residential Demand Could Rebound

The residential sector stands to benefit significantly from improving economic conditions.

Many Filipino families have postponed purchasing homes while waiting for better financing conditions. Lower mortgage rates can make monthly payments more manageable and encourage buyers to move forward with their plans.

The effect may be particularly noticeable in:

• Affordable housing developments

• Mid-market subdivisions

• Condominium projects in key urban centers

• House-and-lot developments in emerging growth areas

Overseas Filipino Workers may also become more active in the market as financing becomes more attractive and economic sentiment improves.

Developers who have been carefully managing inventory could see stronger sales activity if buyer confidence continues to recover.

Commercial Real Estate May Gain Momentum

The commercial property sector is also positioned to benefit from stronger economic activity.

As businesses expand operations, demand for office space, retail locations, and mixed-use developments can increase. Business process outsourcing firms, technology companies, and service industries remain important drivers of office demand in major business districts.

Retail property may also experience improved performance if consumer spending strengthens. More employment opportunities and higher household incomes often translate into increased spending, which supports shopping centers, restaurants, and commercial establishments.

Developers with strategically located commercial properties could find themselves well-positioned as business confidence improves.

Industrial and Logistics Properties Remain a Bright Spot

Among all real estate segments, industrial and logistics properties may be among the biggest beneficiaries of manufacturing growth.

The Philippines continues to attract investment in manufacturing, logistics, warehousing, and supply-chain operations. Companies seeking to improve distribution networks require modern industrial facilities located near transportation corridors, ports, airports, and major population centers.

Industrial parks, logistics hubs, and warehouse developments have become increasingly attractive to investors because they are closely linked to economic activity rather than consumer sentiment alone.

As manufacturing expands, demand for these facilities is likely to remain strong.

Infrastructure Projects Could Amplify Growth

Infrastructure remains a critical factor in determining where future property demand will emerge.

Major transportation projects, including rail systems, airports, expressways, and road networks, continue to reshape the country's economic geography. Improved connectivity can dramatically increase the attractiveness of previously overlooked locations.

Areas connected to new transportation corridors often experience rising land values as accessibility improves. Businesses become more willing to establish operations in these areas, while residential buyers are attracted by shorter commuting times and better access to employment centers.

The combination of lower interest rates, manufacturing growth, and infrastructure development could create particularly favorable conditions for property appreciation in selected growth corridors.

Opportunities for Property Investors

Investors should pay close attention to changing market conditions.

Periods of improving affordability often create opportunities to acquire properties before demand accelerates significantly. Investors who identify emerging locations early may benefit from both rental income and long-term capital appreciation.

Particular attention may be warranted for:

• Residential projects near infrastructure developments

• Industrial and logistics properties

• Mixed-use developments in growth corridors

• Emerging provincial cities with expanding economic activity

Successful investing will still require careful due diligence, proper market analysis, and a long-term perspective. However, improving economic conditions may provide a more supportive environment than investors have seen in recent years.

What Buyers Should Consider

For prospective homebuyers, lower interest rates can improve affordability, but purchasing decisions should still be based on individual financial circumstances.

Buyers should evaluate:

• Long-term payment affordability

• Job security and income stability

• Location quality and future growth potential

• Developer reputation

• Infrastructure plans affecting the area

A lower interest rate can reduce monthly payments, but selecting the right property remains just as important as securing favorable financing.

Challenges Remain

Despite the positive outlook, some challenges continue to face the property sector.

Global economic uncertainty, inflationary pressures, construction costs, and geopolitical risks could affect market performance. Supply levels in certain condominium markets also require monitoring, as excessive inventory can limit price growth.

Developers and investors should remain selective and focus on locations supported by genuine economic fundamentals rather than speculative expectations.

The strongest-performing markets are likely to be those supported by employment growth, infrastructure investment, and sustained business activity.

Looking Ahead

The Philippine property market appears to be approaching an important turning point. Lower interest rates have the potential to improve affordability and encourage buyer activity, while stronger manufacturing performance suggests that the broader economy is gaining momentum.

Together, these developments could support a gradual revival of demand across residential, commercial, industrial, and mixed-use property sectors.

While challenges remain, the overall outlook is becoming increasingly positive. For buyers, investors, and developers willing to take a long-term view, the combination of easing borrowing costs and strengthening economic activity may create some of the most attractive opportunities the Philippine real estate market has seen in years.

Source: Ziggurat Real Estate

From Offices to Co‑Living: How Hybrid Spaces Are Redefining 2026 Real Estate

The office building is no longer just a place to work, and residential buildings are no longer just places to sleep. In 2026, the line between work and home is blurring as “hybrid spaces” transform how developers, investors, and tenants think about real estate. From converted downtown offices turned into co‑living campuses to condos built with embedded coworking pods, the hybrid model is reshaping cities, pricing, and lifestyle expectations.

Why offices are becoming homes (and vice versa)

For years, the pandemic‑driven office‑vacancy crisis left many landlords with half‑empty towers and stubborn lease expirations. In 2026, a growing number of developers are repurposing these underused office blocks into co‑living, hybrid work‑residential, or live‑work communities. By converting floorplates into compact apartments, shared kitchens, and flexible coworking lounges, they turn costly liabilities into demand‑driven products that suit younger nomads, remote workers, and gig‑economy professionals.

At the same time, many residential projects are adding “work‑ready” features: sound‑proofed alcoves, high‑speed fiber, shared meeting rooms, and even startup‑style coworking floors. For buyers and tenants, this means you are no longer choosing between “home” and “office” but between purely private space and hybrid living environments that blend both.

The rise of co‑living and coliving‑style hubs

Co‑living wasn’t invented in 2026, but this year it is moving from boutique experiment to mainstream housing strategy. Operators are securing leases on entire office floors or low‑rent commercial blocks, then subdividing them into private studios or micro‑units with shared kitchens, lounges, gyms, and event spaces. These setups appeal strongly to:

• Young professionals who want low‑commitment, furnished housing.

• Remote workers and digital nomads who expect Wi‑Fi, plug‑and‑play desks, and community events.

• Small startups that want to cut office costs while living in the same building as teammates.

In many cities, co‑living buildings are effectively acting as hybrid asset‑types: part multifamily rental, part coworking space, and part social club. That diversification makes them more resilient to economic swings than traditional office or pure‑rental models.

Hybrid spaces as a fix for office oversupply

In markets with high office vacancy, planners are increasingly welcoming office‑to‑residential and office‑to‑hybrid conversions. These deals often benefit both cities and landlords:

• Developers can tap into stronger residential demand while dodging the glut of generic office space.

• Cities gain new housing inventory without paving over greenfield sites.

• Investors can improve cash flow by replacing long‑term, low‑yield leases with higher‑margin, mixed‑use income.

In 2026, zoning reforms and “fast‑track” permits are accelerating this shift, especially in urban cores where land is scarce and commuting patterns are changing. Offices that once housed 1,000 employees may now house 400 residents, 100 coworking desks, and an events space, all in one building.

How this changes the buyer’s and investor’s calculus

For buyers and investors, the arrival of hybrid spaces means rethinking what “good” location and “good” asset type look like:

• Location: Proximity to transit and lifestyle amenities often matters more than proximity to a single corporate office park.

• Amenities: Shared workspaces, event rooms, and social programming can justify higher rents or sale prices, especially in dense urban markets.

• Risk profile: Mixed‑use hybrid buildings can offer more stability, since a downturn in office demand may be offset by strong residential or coworking demand.

For first‑time buyers, these spaces can also lower entry barriers: smaller units, shorter leases, and bundled services mean lower upfront costs and more flexibility than traditional single‑family homes or long‑term leases.

In 2026, real estate is no longer just about “walls and roofs.” It’s about how spaces can flex between work, life, and community—and who wins when the office becomes a home, and the home becomes a workspace.

Source: Ziggurat Real Estate