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  • Writer's pictureZiggurat Realestatecorp

Sustained Philippine economic gains to trickle down to property

The Philippine economy posted its fastest pace of growth in more than 40 years in 2022. This is a positive signal for the property market which, over the past decades, mirrored the boom-bust cycle of the country’s economic output. This economic expansion should support positive net take-up of office space in 2023 and continued rebound in Metro Manila’s pre-selling and secondary residential markets.

An aggressive stance taken by the National Government in attracting manufacturing investments should result in greater absorption of industrial space across the country. The personal consumption-led economic growth should also spur retail and hotel demand.

To cash in on the sustained growth, developers should line up more projects in key growth areas outside of Metro Manila. Developers of industrial parks and facilities should also prepare for greater take-up as manufacturing investments committed with investment promotion agencies take up industrial space and warehouses.


In 2022, the country’s economy grew by 7.6%, exceeding the government’s target of between 6.5%-7.5% for the year and the fastest since 1976. The 2022 GDP print also surpassed most forecasts of economic analysts. The Philippines was also one of the fastest growing economies in Asia last year, only behind Vietnam’s 8% growth.

In 2023, economic output is likely to grow at a slower pace of between 6%-7% as elevated inflation and a possible global economic recession are likely to temper the country’s expansion.


In 2022, office transactions in Metro Manila reached 603,800 square meters (6.5 million square feet), up 43% from the 422,400 sq.m. (4.5 million sq.ft.) recorded in 2021.

Meanwhile, provincial transactions nearly doubled to 222,800 sq.m. (2.5 million sq.ft.) from 113,100 sq.m. (1.2 million sq.ft.) a year ago. Outsourcing firms accounted for nearly 70% of total provincial deals. Cebu, Davao and Pampanga covered nearly 90% of total provincial transactions in 2022.

Colliers recorded the completion of 750,300 sq.m. (8.1 million sq.ft.) of new office space in 2022. From 2023 to 2026, we expect the annual delivery of about 555,000 sq.m. (6.0 million sq.ft.), the same level of new supply that Colliers recorded from 2013 to 2016 (450,000 to 550,000 sq.m.), prior to the entry of POGOs.

Meanwhile, vacancy as of end-2022 reached 18.8%, higher than the 15.7% recorded in 2021. In 2023, we see vacancy rising further to 20.2% on the back of completion of 641,100 sq.m. (6.9 million sq.ft.) of new supply. Net take-up in 2022 reached 110,500 sq.m. (1.2 million sq.ft.), lower than our initial forecast of 140,000 sq.m. (1.5 million sq.ft.) but still a reversal from the negative net absorption that we recorded from 2020 to 2021.


Colliers recorded the completion of 9,000 condominium units in 2022, a mere 3% rise year on year. This brings Metro Manila’s condominium stock to 151,200 units as of end-2022. From 2023 to 2025, we project the annual average delivery of 6,700 units. By 2024, we expect Bay Area’s condominium stock to overtake Fort Bonifacio’s aggregate supply.

Demand in the pre-selling market rebounded as we recorded about 20,000 units sold in 2022, from a take-up of 13,300 units in 2021. Meanwhile, full-year launches reached 24,200 units, down 19% year on year.

In our view, the rising interest and mortgage rates, as well as the increasing prices of construction materials likely tempered condominium launches in 2022. New launches have yet to revert to pre-COVID levels.

In 2022, the share of the luxury and ultra-luxury market (P8 million and above per unit) to total condominium take-up reached 34%, from only 5% in 2021. Colliers believes that take-up for this segment will likely be sustained by demand from the affluent market banking on luxury and ultra luxury residential properties’ capital appreciation potential.


Data from the Department of Tourism (DoT) showed that foreign arrivals reached 2.65 million in 2022, 1,519% higher than the 163,879 arrivals in 2021. The 2022 figure exceeded the Tourism department’s initial target of 1.7 million for the year. Among the country’s top source markets in 2022 include the United States, South Korea and Australia.

With renewed optimism, the DoT now expects foreign arrivals to reach 4.8 million in 2023. However, this year’s projection remains below the record-high 8.2 million international arrivals recorded in 2019.

In 2022, Colliers recorded an average hotel occupancy of 51%, up from 44% in 2021 and 20% in 2020. We attribute the improvement in occupancy to holiday-induced spending, return of more Filipinos working abroad, and the surge in Meetings, Incentives, Conferences and Exhibitions (MICE) activities. The latter indicates that business travelers are back and in-person events are gradually returning.

In 2023, we project average hotel occupancy in Metro Manila to breach 60% due to the influx of more foreign visitors and continued growth from the local staycation market. We also see the resurgence of in-person events lifting the demand for MICE facilities and business hotels.

Colliers Philippines is optimistic that a strong economic rebound will redound to Philippine property. Developers and investors need to be more agile as they reap gains in the market.

The Philippine property is bound for rebound, is turning a corner, and seeing light at the end of the proverbial tunnel. All these point to the Philippine property market finally roaring back after two consecutive years of slump.

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