The Philippine residential property market showed signs of recovery in the first quarter of 2025, with condominium demand rising 14 percent, according to Leechiu Property Consultants.
The growth was supported by favorable policy rate cuts and developer promotions. The retail and data center sectors also showed resilience, with retail sales exceeding pre-pandemic levels and the data center market continuing to attract investment despite challenges.
“We’ve seen a good start for the year for the residential market. But we need to move with caution for now due to very recent developments in the world capital markets,” said Roy Golez, director of research and consultancy at Leechiu.
“For developers, they will need to be more aggressive with their marketing: their promos, payment terms. For buyers, this will be a good time to research and take a deeper dive and look at the developer offerings. There might be a short window of opportunity to acquire property at favorable terms while supply is not yet at comfortable levels,” Golez said.
Residential condominium demand in Metro Manila grew by 14 percent in the first quarter, with 6,508 units sold. The increase comes as key policy rate cuts over three consecutive quarters, and the anticipation of more, have helped ease buyer concerns and fuel property acquisitions.
New residential project launches saw a sharp drop of 77 percent, with only 1,347 units launched in the first quarter of 2025 compared to 5,928 in the previous quarter. Developers are focusing on marketing existing inventory, particularly in the mid-range segment, before launching new projects.
Non-performing residential real estate loans (NPRREL) continued their decline, reaching 6.3 percent in the fourth quarter of 2024, down from a peak of 9.6 percent in the third quarter of 2021 during the pandemic. However, this ratio has yet to return to pre-pandemic levels.
While developer promotions and competitive payment terms have spurred buyer interest, recent volatility in global capital markets may temper this enthusiasm. Buyers are advised to conduct thorough research to capitalize on favorable terms while supply remains tight.
The luxury residential segment experienced a 39-percent decline in sales in the first quarter. However, this sector remains attractive for long-term investors, as several developers plan to launch new luxury projects in the coming years, increasing market competition.
The retail sector showed a strong recovery, with revenues from the top three mall developers surging 19-poercent above pre-pandemic levels. Between 2019 and 2024, 977,000 square meters of gross leasable area (GLA) was added, increasing retail space portfolios by 9 percent.
The food and beverage (F&B) sector exceeded its 2019 revenue levels by 11 percent as of the first nine months of 2024, reflecting strong consumer demand and recovery in the retail market.
The Philippines’ data center market remains robust, with a current power capacity of 215 megawatts and an additional 1,505 MW under development. Despite local concerns, the government’s renewable energy targets are driving long-term confidence in the sector, attracting continued foreign investment.
“The outlook for the Philippine property market in 2025 remains cautiously optimistic,” Leechiu said in a statement.
“The residential market is expected to continue its recovery, although global capital market volatility may introduce short-term uncertainties. Developers are likely to remain focused on selling existing inventory, particularly in the mid-range and luxury segments, where competition is expected to intensify,” it said.
Meanwhile, the Philippine office market showed a 7-percent year-on-year increase in demand to 355,000 square meters, despite the absence of Philippine Offshore Gaming Operators (POGOs) and demand from government-related deals.
This was largely driven by the IT-Business Process Management (IT-BPM) sector, predominantly from Global In-House Centers (GICs), which continue to view the Philippines as a strategic outsourcing destination. Notable sub-sectors include healthcare and financial industries.
The Ortigas/Mandaluyong/San Juan area recorded the highest number of lease transactions, totaling 59,000 sqm, reflecting growing interest in emerging submarkets offering competitive rental rates. Bonifacio Global City has already absorbed 51,000 sqm—equivalent to 40% of its total demand from 2024 (126,000 sqm)—within the first quarter of 2025 alone.
The number of vacant office spaces declined from 312,000 sqm to 277,000 sqm, primarily driven by the continued exit of POGOs. With the pace of these exits slowing, contractions are expected to ease further in the coming quarters.
The nationwide office vacancy rate held steady at 17 percent in the first quarter of 2025, a slight improvement from the previous quarter’s 18%. While vacancy remains in double digits, the decline reflects a gradual recovery, driven by sustained demand and a slowdown in space contractions. Vacancy is expected to trend further downward in core central business districts (CBDs) such as Makati and BGC.
The Philippine office market is projected to achieve a net take-up of 490,000 sqm by end-2025, representing a 16-percent year-on-year increase.
The growth will be fueled by strong leasing activity, particularly from the IT-BPM sector, and a continued slowdown in space contractions due to the tapering of POGO exits, Leechiu said.