Rate cuts, greater infra spending, decentralization
The Philippine property sector is poised for growth, driven by economic policies, infrastructure investments, and expected rate cuts in 2025. Healthy consumer spending, innovations in real estate investment trusts (REITs), and extended government support are seen to further enhance market resilience and investor appeal.
Deeper cuts, greater purchasing power for Filipinos
The Bangko Sentral ng Pilipinas (BSP) said it is likely to implement more interest rate cuts in 2025. This should prop up domestic spending, which slowed in 2024.
Colliers View:
Colliers believes that further interest rate cuts will have a substantial impact on key segments including residential, retail, hotel, office and industrial. Lower interest rates will partly prop up personal consumption, which should encourage more spending in the retail and leisure sectors.
The easing of policy rates will also be beneficial for traditional firms and industrial locators planning to expand their operations. Lastly, lower interest rates should result in lower mortgage rates which will likely help revive demand in the residential market.
‘Build, Better, More’ a plus for Philippine property, economy
Infrastructure spending grew by 55 percent in November 2024 compared to the same period in 2023. A portion of the outlay was allocated for the government’s counterpart funding for railway projects.
Colliers View:
The continued allocation of between 5 percent and 6 percent of the country’s GDP on infrastructure should keep the Philippines at par with its competitive Asian peers including China, Singapore, Malaysia, Thailand, and Indonesia. Ramped up infrastructure spending should support the property sector’s recovery.
In our view, the infrastructure projects implemented by the Philippine government have helped redefine and redirect developers’ expansion strategies outside of Metro Manila.
Hotels as REIT asset classes
Several developers are exploring the viability of infusing hospitality projects into their real estate investment trust (REIT) vehicles. Some developers are banking on the hotel sector’s recovery and are ramping up the development of foreign-branded hotels in key tourist destinations including Bohol, Pampanga, Cagayan de Oro, Cebu, and Davao.
Colliers View:
Colliers believes that the Tourism Department’s push to boost domestic tourism, coupled with the development and modernization of more regional airports should compel developers to expand their leisure footprint across the country.
In our view, now is an opportune time for property firms to build more accommodation facilities particularly in popular and emerging tourist spots given the continued rise in tourist arrivals and modernization of infrastructure. Developers with REIT vehicles should also consider divesting hotel assets in their portfolio.
Hotels generate recurring income and are now a viable REIT asset class as occupancies and ADRs (average daily rates) are starting to increase.
Extending BCDA’s corporate term a boon to property
The Senate has approved on second reading a proposed measure that amends the charter of the Bases Conversion and Development Authority (BCDA). The proposed measure allows the strategic sale of certain portions of former military bases, such as the Clark Freeport and Special Economic Zone, Camp John Hay, Bataan Export Processing Zone, and Poro Point Freeport Zone. It also extends the corporate term of BCDA for another 50 years.
Colliers View:
The creation of more economic zones plays a crucial role in enticing more foreigners to invest in the Philippines. The property sector benefits from this especially the office and industrial segments.
The BCDA has also been instrumental in the creation and improvement of economic zones in Metro Manila and this advances the government’s decentralization thrust. In our view, developers will likely benefit from the proliferation of more economic centres outside Metro Manila, enabling them to build offices and residential projects in high growth areas.
