Conclusion
THIS is the conclusion of the piece on what to expect in the Philippine property scene in 2025. The Philippine economy continues to enjoy stellar growth, and we see this providing opportunities for the real estate sector, especially in the retail, residential, and industrial segments.
In our view, these are the property sub-segments likely to benefit from interest rate cuts recently implemented by the central bank. The Philippines’ young and skilled workforce with constantly rising disposable incomes also support these sub-segments’ growth beyond 2025.
RETAIL: MORE EXPERIENTIAL, LESS TRANSACTIONALThe retail sector has exhibited resilience over the past 12 months with Philippine malls attracting greater interest from foreign retailers. Some mall developers have even reported that consumer traffic is even greater than pre-pandemic level and this presents tremendous opportunities for retailers and consumers alike.
There will be a focus on experiential retail and special products and services. Even luxury is facing ‘fatigue’ at the moment, and we project that brands that will do well are those that offer unique curation and offering.
We are now seeing the impact of Retail Trade Liberalization Law on physical mall space absorption. With rising interest on the Philippine retail landscape, Colliers expects the entry of more anchor tenants particularly in major regional and super-regional malls across the capital region. 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.
Mall operators are also implementing shifts to suburbia even in the retail sector, resulting in more retail centers outside of the capital region. Among the malls undergoing redevelopment and are scheduled to open outside Metro Manila include the Filinvest Mimosa Mall in Pampanga, Power Plant Malls in Bacolod and Pampanga by Rockwell Land, Megaworld’s The Upper East Mall in Bacolod, Ayala Malls Abreeza expansion, and the redevelopment of Ayala Center Cebu and Robinsons Bacolod.
Colliers sees the expansion of foreign retailers including those from the home furnishing segment. We believe that the eventual take-up of the sizable number of ready-for-occupancy (RFO) units in Metro Manila will likely support the demand for furniture and home accessories.
RESIDENTIAL: KNOW YOUR DEMAND, BEFORE YOU EXPANDTempered new launches in the capital region would mean tempered take-up particularly for condominiums in Metro Manila given the sizeable number of unsold pre-selling and completed/RFO units right now that could take more than five years to absorb given the current take-up rates.
Colliers believes that the substantial number of unsold RFO units is constricting developers to launch new condominium projects in the capital region. As of Q3 2024, Colliers data showed that unsold inventory in Metro Manila (covering pre-selling and RFO) reached 75,300 units. It will take about 5.8 years to fully sell out all these unsold condominium units, about five times longer compared to the pre-pandemic period (2017 to 2019) where remaining inventory life (RIL) ranged between 0.9 and 1.1 years. Of the 75,300 remaining inventory, 27,200 are RFO valued at P154.4 billion ($2.8 billion). This is a sizable amount yet to be taken up.
The lower to upper mid-income segments (P3.6 million to P12 million) accounted for 57% of remaining RFO inventory in Metro Manila as of Q3 2024. Meanwhile, among the submarkets with high level of unsold RFO units include Pasig City, QC-South, Parañaque, Manila North, Makati Fringe, and QC-North.
Developers are likely to continue the shift to suburbia with lots-only and house-and-lot (H&L) projects outside of Metro Manila and in key areas outside NCR (AONCR).
Horizontal projects remain attractive. We encourage developers to consider the viable locations for H&L and lot-only projects including provinces in Calabarzon, Central Luzon, Central Visayas, Western Visayas, and Davao region. H&L projects in these property hotspots recorded an average annual price increase of 4% to 7% from 2016 to 2023. Lot-only developments, meanwhile, recorded stronger price appreciation during the period, ranging between 7% and 15% annually from 2016 to 2023.
Colliers sees greater focus on leisure developments but unlike the property cycle in the mid 1990’s, the development is more holistic, and masterplanned with various land uses.
Colliers data showed that these projects were already popular pre-Covid but the pandemic only highlighted the strong take-up for these leisure-centric residential enclaves. Some of these leisure-oriented projects are dispersed across Batangas, Cavite and Cebu. Other locations likely to attract similar investments include Palawan, Boracay, Bohol, and Davao. The demand for these projects should also get a boost from the recovery of the country’s travel and tourism sector. Colliers also sees the revival of demand for golf communities within and outside Metro Manila.
INDUSTRIAL: HOT ON COLD STORAGEThe industrial sector stands to benefit from the government’s push to promote the country as a manufacturing hub in the ASEAN region. Colliers sees semiconductors, food and beverage (F&B) manufacturers as well as sunshine industries including electric vehicles (EVs) likely propelling industrial space absorption across the country. We encourage industrial players to incorporate technological innovation into their warehouses and work with the government and other stakeholders in upskilling manufacturing workforce and ease the process of registering businesses to send a signal to foreign industrial locators that the Philippines is open for business.
Colliers also projects the cold chain sector likely sustaining demand for industrial and warehouse assets. We see this subsegment thriving even post-pandemic. The Cold Chain Association of the Philippines (CCAP) expects the sustained expansion of country’s cold storage capacity. This should entice more foreign locators to invest in the country’s cold chain segment.
The opportunities for Philippine property are boundless. We should aim to thrive in 2025.
Joey Roi Bondoc is the director and head of Research of Colliers Philippines.
