The Philippine real estate industry faces ongoing challenges, requiring property developers to be nimble and adaptable to maintain profitability in the coming year.

In its outlook for 2025, Colliers Philippines also sees the local market to be ripe for the entry of foreign players in both the retail and hospitality sectors.

"The next 12 months provide vast opportunities for developers to reassess their strategies. They should identify growth opportunities and know how to recalibrate," said Colliers Philippines Research Director Joey Roi Bondoc.

Bondoc emphasized the importance of navigating challenges and opportunities: "2025 is a year where we will likely see the full impacts of policy changes implemented in 2024 and the results of midterm elections likely to set the stage for 2028 national polls.”

“Property firms should thoroughly evaluate headwinds in the market but should be quick in maximizing tailwinds. Only those who pivot will stay afloat,” he added.

The past year has brought mixed results for Philippine real estate. Office vacancies remain high, and Metro Manila's condominium inventory absorption is slow.

However, the retail sector shows sustained growth despite new supply, and consumer spending is rebounding, benefiting the leisure sector with occupancy rates tripling since the pandemic. Industrial parks are also expanding, driven by electric vehicles and related components.

"Colliers sees tempered condominium launches in Metro Manila due to lengthened remaining inventory life. The POGO (Philippine offshore gaming operators) exodus will also likely have an adverse effect on the residential leasing market, particularly the Bay Area and Makati Fringe," said Bondoc.

He expects a rise in foreign retailers: "We expect the more aggressive entry of foreign retailers in physical malls. Developers will continue to renovate their existing spaces and introduce immersive concepts to attract greater foot traffic."

The Retail Trade Liberalization Law is impacting mall space absorption. "With rising interest in the Philippine retail landscape, Colliers expects the entry of more anchor tenants, particularly in major regional and super-regional malls across the capital region,” said Bondoc.

He added that the "Philippine economy is primarily consumption-driven, and this entices foreign retailers to invest in the country. Foreign players are now more aggressive in taking up physical mall space."

Meanwhile, electric vehicles, food and beverage, and semiconductor manufacturers will drive industrial space demand. Cold storage is another sector expected to see sustained growth.

Colliers forecasts that four and five-star hotels will dominate new supply in Metro Manila in 2025, with more hotels and MICE (Meetings, Incentives, Conferences, and Exhibitions) facilities opening in key tourist areas.

The firm believes foreign brands have an opportunity to expand in the Philippine hospitality sector, given planned airport modernizations and projected increases in international arrivals. New hotels from brands like Sheraton, InterContinental Hotels, Dusit Thani, Citadines, Tryp by Wyndham, and AppleOne's JW Marriott in Panglao, Bohol are in development.

Colliers advises developers to consider locations near future convention centers and modernized airports outside Metro Manila for hotel expansion.

Colliers projects a recovery in office space demand in 2025, driven by traditional and outsourcing firms.