PH property sector’s 2026 outlook mixed

Expect a “mix of headwinds and tailwinds“ in the Philippine property sector in 2026, said Joey Roi Bondoc, director and head of research at real estate services and investment management firm Colliers Philippines.

On the upside, the Metro Manila office market is showing signs of recovery and will improve next year, Bondoc pointed out, noting the recovery will be driven by IT-BPM firms and traditional corporate occupiers.

Other forecasts, according to Bondoc:

From 2026 to 2028, about 350,000 sq m of new office space will be delivered — significantly lower than pre-pandemic levels, but ensuring manageable supply.

Prime central business districts (CBDs) such as Makati and Bonifacio Global City will lead rental recovery, while flexible workspaces will expand aggressively in Cebu, Pampanga, and Iloilo, supporting decentralization and business continuity strategies.

Unsold houses

On the downside, as of the third quarter, the Metro Manila residential sector had over 30,000 unsold, ready-for-occupancy units for which real estate developers offered promos such as extended payment terms and rent-to-own schemes to increase mid-income sales amid elevated mortgage rates.

However, the C5 Corridor and Katipunan areas continue to draw buyers, with take-up rates reaching up to 100 percent for select projects.

Industrial estate, hotel markets

Central Luzon is seen to dominate the industrial estate market. Colliers projects 870 hectares of industrial land to be delivered from 2026 to 2028, quadruple the pipeline of Southern Luzon.

Despite low foreign visitors, the country’s hotel market benefits from domestic tourism and various meetings, incentives, conferences, and exhibitions (MICE).

Over 3,000 new hotel rooms are to be completed in 2026 in Makati and the Manila Bay Area, Bondoc said.

The retail property trends remain strong, with Metro Manila vacancy to fall below 10 percent by end-2026. Foreign brands and aggressive mall refurbishments are driving demand, while developers expand outside Metro Manila into Cebu, Bacolod, and Davao.

To achieve growth, developers must embrace diversification, invest in emerging growth corridors, and leverage technology-driven solutions to stay competitive amid shifting demand patterns, Bondoc advised.

“To thrive in this cyclical market, developers must future-proof strategies — diversify portfolios, invest in suburban growth corridors, leverage industrial expansion, and embrace flexible workspace solutions. Capitalizing on retail refurbishments and innovative residential promos will be key to staying competitive in the evolving Philippine real estate market,“ Bondoc said.

Source: Manila Times

Lackluster GDP to impede property’s recovery

The third quarter gross domestic product (GDP) growth of the Philippines was a disappointing 4% — due mainly to tempered household consumption as well as constricted government infrastructure spending. The third quarter (Q3) 2025 GDP growth was the weakest quarterly economic expansion recorded since the third quarter of 2011, a period that also saw slower spending due to corruption allegations involving public projects.

While Q3 is historically a slow quarter, the sharp slowdown was worse than what economists projected. Average GDP growth for 9M 2025 is now at 5%, even lower than the 5.5% to 6.5% estimate of the country’s economic managers. Hence, it is no longer surprising to see credit rating agencies and multilateral aid agencies also downgrading their growth forecast for the Philippines for 2025.

Colliers Philippines is still hoping for a strong finish for the property sector. Fourth quarter is traditionally a strong period for retail spending due to higher remittances and disbursement of holiday bonuses for public and private sector employees.

Greater purchasing power supported by attractive ready for occupancy (RFO) promos should also help lift demand for residential units, especially mid-income (P3.6 million to P12 million a unit) condominiums primarily targeted by developers’ “renter to owner” schemes.

The office market has so far surpassed initial projections for 2025, but stakeholders are on the lookout for anti-outsourcing measures that might impede the Philippine business process outsourcing (BPO) sector’s growth beyond 2025.

SLOWEST QUARTERLY GROWTH SINCE Q3 2011

In Q3 2025, the Philippine economy expanded by 4%, the slowest since the 3.8% contraction in Q3 2011. As of 9M 2025, average GDP reached 5%, lower than the government’s full year target of between 5.5% and 6.5%. The country remains one of the fastest growing economies in Southeast Asia in 9M 2025, next to Vietnam’s 7.7%.

Steady GDP expansion is essential for the country to generate decent jobs and ensure growth in individual incomes. Improving workers’ purchasing power is crucial in fueling residential demand.

CENTRAL BANK EASES RATES FURTHER, INFLATION HOLDS STEADY

The Bangko Sentral ng Pilipinas (BSP) or central bank cut its policy rate for the fourth straight meeting, reducing the benchmark rate by another 25-basis points (bps) to 4.75% in October, the lowest since September 2022.

The central bank noted that inflation outlook remains within the target range of 2% to 4% but highlighted the weaker economic outlook and the decline in business confidence as key reasons for further rate cuts.

Since August 2024, the central bank has cut a total of 175 bps.

Inflation reached 1.7% in October 2025, an easing from 2.3% a year ago. As of 10M 2025, average inflation reached 1.7%, below the government’s 2%-4% target range.

SHIFTING GEARS BEYOND 2025

The office and residential markets are now starting to move sideways in the property cycle. With substantial correction in office rents at the height of the pandemic, Colliers is hopeful that recent tailwinds in the office market will result in gradual recovery in lease rates within and outside Metro Manila.

It appears that property developers have finally accepted what needs to be done to revive the Metro Manila vertical market, especially the mid-income segment which is now the focal point of developers’ RFO promos. The retail segment continues its aggressive recovery post-covid, with strong absorption and limited new retail space resulting in drop in vacancy and rise in rents.

The Q3 results point to a need for massive pump-priming from the government. Continued slowdown in government’s infrastructure program will likely result in a Philippine economy grinding to a halt — so it is crucial that private personal consumption expenditures in Q4 are supported by ramped up public sector spending.

With the current market dynamics, it’s obvious that the Philippine economy and property are still moving, but not sprinting. Until we see sweeping governance reforms and an eventual return of private investor confidence, we’re bound to see property opportunities not exactly shouting, but whispering.

Source: Business World

Philippines capital markets set for gradual recovery through 2026

The Philippine capital markets are poised for a gradual recovery heading into 2026, buoyed by the Bangko Sentral ng Pilipinas’ (BSP) dovish monetary stance, stable property values and investor-friendly reforms, according to the third-quarter Philippine Property Market Report by Leechiu Property Consultants.

Despite the Philippine Stock Exchange index (PSEi) underperforming its regional peers with an 18.2-percent year-to-date decline, the country’s market fundamentals remain sound, the property consultant said.

The BSP’s successive rate cuts, lowering policy rates to five percent in August, have eased borrowing costs and supported renewed investor appetite for income-generating assets such as real estate investment trusts (REITs), Leechiu said.

Among the top-performing REITs, AREIT Inc. (AREIT), RL Commercial REIT, Inc. (RCR) and DDMP REIT, Inc. (DDMPR) posted double-digit returns in the third quarter.

The performances, coupled with stable accommodation values in major business districts, have provided an anchor of stability amid volatile equity conditions.

“While the PSEi remains an underperformer among Asian indices, REITs shine as a strong defensive play in Q3,” said Leechiu Property Consultants investment sales manager Renzo De Guzman.

“The sector continues to offer an attractive risk premium, with dividend yields steadily outpacing bonds with lowering interest rates,” said De Guzman.

Leechiu Property Consultants also highlighted the enactment of the 99-Year Land Lease Law (Republic Act No. 12252) as a major policy breakthrough expected to attract long-term foreign investments, particularly in tourism, manufacturing and property development.

“This law provides the needed leniency and long-term security compared to regional peers, serving as the crucial catalyst to boost the property sector to the next level,” De Guzman said.

Meanwhile, the Philippine tourism sector continued its steady recovery in the third quarter of 2025, buoyed by rising domestic travel, new hotel developments and anticipated improving investor sentiment following the passage of the 99-year foreign lease law.

Leechiu Property Consultants (LPC) said that while international arrivals remain below pre-pandemic peaks, domestic travel is surging toward historic highs.

Domestic tourists are projected to reach 58.7 million in 2025, rising further to 62.2 million in 2026.

This rising demand has spurred a wave of hotel development, with a total of 5,210 new keys to be added in 2025—over 4,300 of which are expected to open in the fourth quarter.

The newly approved 99-year lease law has created a strong foundation for long-term tourism investment, providing global investors with the security to pursue large-scale resort and mixed-use developments, it said.

“With the anticipated growth in domestic and long-haul tourism, along with increased hospitality FDIs driven by the newly-approved 99-year lease to foreign investors, the tourism sector is poised to strengthen its position as a key investment area and a vital pillar of the Philippine economy,” said Leechiu Property Consultants director of hotels, tourism and leisure Alfred Lay.

Source: Manila Standard