The Philippine property sector is showing signs of an uneven recovery, with office leasing holding relatively firm while residential demand faces growing headwinds.
Office demand remains cautiously resilient as companies continue to lock in longer-term leases despite lingering uncertainty. Mikko Barranda, director for commercial leasing at Leechiu Property Consultants (LPC), said many firms are committing to medium- to long-term contracts, typically five to seven years, with some stretching up to a decade.
“That is quite reassuring, given there’s a lot of disruption,” Barranda said, noting that longer lease terms signal stronger tenant confidence and commitment.
Makati City has re-emerged as a preferred location this quarter, benefiting from tightening availability in Bonifacio Global City. Competitive, temporarily adjusted rental rates in select buildings have also prompted tenants to secure space below prevailing market levels.
Still, a projected 227,000-square-meter office pipeline points to potential demand, although actual take-up remains uncertain as firms adopt a wait-and-see approach amid limited visibility on market conditions.
In contrast, the residential segment is expected to face near-term pressure, weighed down by inflation and economic uncertainty, according to Roy Golez, director for research and consultancy at LPC.
Rising fuel and transport costs are squeezing household budgets, reducing capacity for property purchases. Buyers are also turning more cautious.
“We might see a lot of hesitation in making the decision to buy,” Golez said, citing uncertainty and expectations of persistently high fuel prices in the months ahead.
Higher interest rates are further dampening demand, driving up financing costs even as developers seek ways to keep monthly amortizations manageable.
On the supply side, escalating construction costs could lead to project delays or contract renegotiations, potentially compressing developer margins and slowing overall market activity, Golez added.
