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