From the slump during the pandemic years, certain segments of the Philippine real estate sector are on the rebound while others are facing challenges.
Full-service global commercial real estate company Cushman & Wakefield Philippines reported a significant improvement in the shopping mall occupancy rates brought by higher consumer spending and increasing foot traffic.
“The bright spots include the retail segment, which has greatly recovered from the pandemic (higher occupancy), and tourism showing the number of foreign visitors improving close to pre-pandemic levels last year,” says Luis Enrique T. Mangosing, CEO of Metro Development Managers, Inc. (MDMI) and a member of the judging panel for the PropertyGuru Philippines Property Awards.
“Another bright spot is the industrial sector, with the government investing heavily in public infrastructure connecting key regions and building capacities of existing port facilities,” Mangosing added. Driven by significant government investment in infrastructure, the industrial sector is emerging strong with an influx of investments.
“Other segments of the industry, such as the supply chain and data centers, are emerging but not yet significant enough to pick up the huge slack in the commercial and residential sectors,” he continued.
While these sectors are gaining traction in the market, they remain too small to offset the challenges faced by other segments.
The commercial and mid-market residential sectors are challenged with higher vacancies, surplus inventory, and lower yields.
As Mangosing noted, “The commercial and residential segments (mid-market) of the industry are being tested with higher vacancies, surplus inventory, and diminishing yields, driven by lingering post-pandemic effects and other factors such as hybrid work arrangements and the government’s decision to exit the gaming business (Philippine Offshore Gaming Operators – POGO) altogether, among others.”
Hybrid work arrangements have left office buildings with persistently high vacancy rates, while the government’s exit from the (POGO) industry has further contributed to vacancies in commercial spaces.
In the residential segment, the high-end segment is at risk of oversupply due to the production pipeline outpacing demand, according to Colliers Philippines.
“The high-end segment of the residential sector, while highly touted, represents a small number of the overall volume and is also at risk of oversupply given the indicative production pipeline,” Mangosing added.
Meanwhile, the property market remains confronted with a housing backlog in the low-cost and affordable housing segment. Government agencies are mandated to address this situation.
“There is an urgent ‘need’ for the government to create more incentives for private funds to be invested in the production of housing inventory and more direct funding by the government through the National Housing Authority to bridge this gap. Pag-IBIG remains key and very relevant in this ‘scheme of things,” Mangosing said.
The recovery of the real estate sector in the country will continue to be uneven, with segments expanding their markets while others will face slower growth.
“The success of the Philippine property market in 2025 and beyond will depend on how well the industry adapts to these shifting trends,” Mangosing concluded.