From the first quarter report of Leechiu Property Consultants Inc. (LCPI), the Philippine property market showed genuine signs of recovery. However, the industry remains vulnerable to the challenges brought by the increasing uncertainties and unfavorable financing conditions stemming from the global conflict and its effect on the country’s economic conditions.

Despite the turbulence, LCPI cited structural advantages that keep the Philippine market compelling. Prices have held firm; the Bangko Sentral ng Pilipinas residential property price index is up 51 percent cumulatively since 2019, the strongest in the region. The market is overwhelmingly locally owned, with 95 percent of residential transactions involving domestic buyers, creating a natural price floor. The Philippines has Asia’s youngest population, with a median age of 26.6, meaning housing demand has a 40-year demographic runway. And the consumption engine, anchored by $35.6 billion in OFW remittances and 4.6 percent household consumption growth, remains fundamentally sound even if the oil shock poses near-term risks.

In the first quarter of 2026, the Metro Manila residential demand rose to 7,732 units, a 19 percent increase year-on-year. LPC said that this upward movement was largely driven by end-users responding to developer promotions and price incentives, rather than a broad shift in market momentum. Speculative investor interest remains subdued due to compressed rental yields at 3.8 percent for primary units and 4.6 percent for secondary units. Unsold inventory remains elevated at 31 months of supply, requiring external risks to moderate and rental yields to normalize relative to capital values to fully recover.

On the global conflict’s impact on the sector, Roy Amado L. Golez, Jr., director of Research, Consultancy, and Valuation of LCPI, said, “With the increasing uncertainty and unfavorable financing conditions, the demand situation will be challenging. We see that new project launches will be limited in the short term. There will be margin compression as demand will be sluggish as construction costs rise.”

Tam Angel, director of Investment Sales at LCPI, however, advises buyers to take advantage of the situation. “This is actually a good time to look around. Developers are offering extended payment terms and promotional pricing, and unsold condo inventory is at 31 months of supply. That means there are deals to be had, particularly for buyers willing to be patient on exits. But the real value right now is in the secondary market, older buildings with bigger cuts and consistent rental or recurring income. These assets are often priced below replacement cost and already generating cash flow, which takes the pressure off your exit timeline. Buyers who position themselves in the next 18 months will be looking back five to seven years from now and likely happy with the positions they take, assuming they chose wisely.”

She also suggests being selective and focusing on high-quality assets in central locations with strong long-term demand drivers. “Think mid- to long-term holds, not quick flips. The near-term environment, with the BSP having just raised rates to 4.5 percent and oil prices still uncertain, does not support short-horizon plays. But for buyers who can take a three- to five-year, maybe even seven-year, view, this is exactly the kind of market where you find value.”

Early this year, gross demand in the office market reached 234,000 sqm, with traditional occupiers leading at 61 percent of take-up and IT-BPM contributing 34 percent. Net demand increased 77 percent year-on-year to 133,000 sqm, driven largely by the absence of POGO-related exits that had weighed on prior quarters. Makati City is the top gainer, capturing 76,800 sqm in transactions. BGC continues to enjoy a vacancy rate of eight percent, while the Metro Manila average rests at 18 percent with an additional supply of 227,000 sqm in the pipeline.

Industrial and retail have been seen to weather the crisis, with rents up 45 percent since 2019 and yields of seven to eight percent, making it the only real estate sector where returns consistently cover borrowing costs. The retail sector continues to show resilience, with the top three developers posting P61.1 billion in the first half of 2025 revenue, up 7.5 percent year-on-year. Prime locations in BGC, Makati, and Ortigas, where vacancy is tightest and recovery most advanced, offer the strongest near-term positioning.

International arrivals grew 3.09 percent year-on-year in the first two months of 2026, reaching 1.32 million visitors. Long-haul markets led the charge, with the U.S., Canada, Australia, and the U.K. all posting healthy gains. Taiwan was the short-haul bright spot with 35.7 percent growth.

But the energy crisis has fundamentally altered the outlook. Jet fuel costs have doubled, long-haul airfares are up 25 to 50 percent, and 80 percent of surveyed hotels report occupancy declines already underway or expected by April. The corporate and MICE segment faces the steepest impact.