PHL property market resilient amid challenges — Santos Knight Frank

By Beatriz Marie D. Cruz, Reporter

THE PHILIPPINE real estate sector is expected to remain resilient despite ongoing political controversies, presenting opportunities for developers to reset strategies and increase transparency in their projects, according to Santos Knight Frank (SKF).

“I think real estate is always seen as a safe haven in times of trouble,” SKF Chairman and Chief Executive Officer Rick M. Santos said during a briefing on Wednesday.

He added that today’s political and economic challenges provide an “opportunity for a reset, a repositioning, and a real look at transparency.”

Mr. Santos noted that Republic Act (RA) No. 12252, which extends the allowable lease period for foreign investors to 99 years, is expected to unlock opportunities for large-scale projects.

He also cited the proposed Condominium Redevelopment Act, which seeks to improve the safety of older buildings, as a measure that could reduce the vulnerability of residential towers to disasters such as floods and earthquakes.

Despite reports that corruption scandals have slowed demand for luxury real estate, the high-end residential market remains robust, Mr. Santos said.

“There is demand for the high-end residential market, and there will continue to be demand, whether that’s from local or international investors,” he noted. “Also, with interest rates being lower, we’ll always see buying and selling.”

He added that he “doesn’t see any massive shifts in the market,” amid ongoing political challenges.

“The real estate sector is not as liquid as the stock market. Real estate is generally a generational asset, and there’ll be changes with politics. Some people will make a lot of money, some will lose money. Wealth is passed on, but there will always be turnover, especially in the high-end sector,” Mr. Santos said.

Manila ranked fifth among global cities in Knight Frank’s Prime Global Cities Index, with a 9.1% year-on-year increase in second-quarter prime residential prices.

Anjo L. Sumait, SKF head of residential services & sales, said developers have focused on horizontal residential projects in key areas outside Metro Manila, amid ongoing infrastructure development and growing demand from young professionals and expanding families seeking affordable housing.

“Residential developers are focusing on the stability of the upscale segment while clearing unsold inventories,” he said.

For the office market, developers are expected to add supply through 2029 despite high vacancies, driven by demand for flight-to-quality and sustainable office spaces, SKF Senior Director for Occupier Strategy & Solutions Morgan McGilvray said.

As of end-November, Metro Manila posted a 21% vacancy rate, with the information technology and business process management sectors driving net absorption to 461,245 square meters (sq.m.).

Metro Manila’s office stock now stands at 8.9 million sq.m., reflecting new spaces completed to accommodate companies resuming onsite operations post-pandemic.

SKF projects approximately 1.2 million sq.m. of new office supply through 2029, including 314,300 sq.m. in 2026, 134,500 sq.m. in 2027, 382,100 sq.m. in 2028, and 200,700 sq.m. in 2029.

“There will be global centers of excellence and shared services driving demand, with growth expected from non-US markets such as Europe and Australia,” Mr. McGilvray said.

Taguig City remains the most expensive office submarket, with rents averaging P1,238 per sq.m. per month, followed by Makati City (P1,193 per sq.m.) and the Bay Area (P895 per sq.m.).

Mr. Santos also noted that industrial real estate demand will be supported by data centers, cold storage facilities, and smart manufacturing warehouses.