PHL real estate seen buffering long-term investments from inflation — Cushman

THE PHILIPPINE real estate sector’s “strong fundamentals” may help cushion long-term investments from global inflation linked to the Middle East conflict, although higher construction costs remain a risk, according to real estate services firm Cushman & Wakefield.

“The recent geopolitical developments in the Middle East, particularly concerning energy transit routes, have introduced new inflationary pressures globally. While this may influence local construction and operational costs, the Philippine real estate sector’s strong fundamentals provide a substantial buffer for long-term investments,” Cushman & Wakefield Philippines Director and Head of Research, Consulting and Advisory Services Claro Cordero, Jr. said in the company’s fourth annual Southeast Asia Outlook report released last week.

In 2025, Southeast Asia’s real estate investment market recovered, with volumes rising 16% to $21.8 billion despite global economic challenges and policy uncertainty, the report said.

The increase came from stronger capital flows into industrial and digital infrastructure, as investors focused on sectors linked to supply chain shifts and artificial intelligence growth.

The report noted that global geopolitical risks persist, including unresolved trade agreements and potential tariff changes affecting transshipment and sectors such as pharmaceuticals and electronics. However, it said the Philippines has lower exposure than Vietnam, Thailand, or Malaysia due to its larger domestic market and lower reliance on US exports.

“Headwinds do not erase opportunity, they reveal it. In a dynamic global environment, the Philippine real estate market continues to surface strategic pockets of growth that are set to stand out in 2026 for investors and developers with a disciplined, long term view,” Cushman & Wakefield Philippines Country Head Dom Fredrick Andaya said.

Wong Xian Yang, head of research for Singapore and Southeast Asia and author of the report, said Singapore continues to provide core liquidity in the region, while Southeast Asia is positioned for the next phase of growth amid diversifying supply chains and expanding institutional-grade assets.

“The recovery in 2025 reflects more than cyclical momentum — it signals a structural shift in capital allocation. Investors are increasingly targeting sectors aligned with manufacturing expansion and digitalization, particularly logistics and data centers,” he added.

Industrial investment sales across the region reached $1.3 billion in 2025, up 48%, with demand centered on prime logistics and warehouse spaces supported by e-commerce growth, third-party logistics expansion, and Southeast Asia’s growing role in global manufacturing.

Singapore, Malaysia, Thailand, and Vietnam benefited from strong trade flows and manufacturing activity, while Indonesia and the Philippines were supported by steady domestic consumption.

Data centers led Southeast Asia’s property investments by volume in 2025, with Johor capturing spillover demand from Singapore. Thailand, Indonesia, the Philippines, and Vietnam remain underserved but are seen as having strong growth potential.

“SEA countries remain an attractive growth target for data centers development and remain underserved, though markets are at different stages of development,” the report said.

For 2026, Southeast Asia is projected to grow by 4.3%, reinforcing its position as one of the world’s fastest-growing regions.

Private consumption across Southeast Asia, excluding Singapore, is projected to reach $5 trillion by 2035, growing at about 8% annually, supported by easing inflation, lower policy rates, and stable unemployment.

“Southeast Asia’s momentum is being fueled not only by investor appetite, but by the region’s expanding consumer base, young workforce and ambitious infrastructure build-out,” Anshul Jain, chief executive – India & Southeast Asia & APAC Office and Retail at Cushman & Wakefield, said.

“We’re seeing stronger cross-border capital movement, deeper participation from global corporates, and growing demand for high-quality, sustainable space — particularly in data centers, where hyperscale expansion continues to accelerate across the region. These fundamentals are enhancing Southeast Asia’s competitiveness and will shape the next phase of real estate growth,” he added. — A.G.C. Magno