During the pandemic, it was challenging for everybody because everything was uncertain, from the economy to job security, reducing purchasing power among Filipino and foreign businesses and consumers.
However, the Philippines’ real estate industry or market has experienced steady growth in recent years after the pandemic. Looking back on 2023, several factors influenced the real estate market creating a significant effect this year. This includes economic recovery, infrastructure development, remote work, and sustainability.
This comprehensive article will give you a clearer picture of the current state of the Philippine real estate market and guide you in making purchasing decisions.
2024 Philippine Real Estate Market
The real estate sector is becoming increasingly important due to the demands of the world’s expanding population. In addition, real estate properties appreciate over time, allowing investors to increase their equity, which significantly leads to long-term financial gains.
In the Philippines, according to the article by Therese Angeles of Own Property Abroad, the real estate market has experienced significant fluctuations in recent years. Between 2010 and 2018, home prices in the country’s Central Business Districts (CBDs) surged by an impressive 125%. However, the market faced a slowdown in 2019 due to the US-China trade war and domestic economic challenges. While housing prices grew modestly by 0.9%, they effectively declined by 1% when adjusted for inflation. The situation worsened in 2020 with the COVID-19 pandemic, causing a 13.2% drop in CBD property values.
Despite these setbacks, the market has shown signs of recovery. Pre-selling activities in CBDs picked up, with 20,000 units sold in 2022, a 54% increase from the 13,000 units sold in 2021. The economic recovery has been bolstered by robust growth in sectors such as manufacturing, automotive repair, construction, wholesale, and retail trade. The Philippine economy grew by 7.6% in 2022, following a 5.7% increase in 2021 and a sharp 9.5% contraction in 2020. Looking ahead, the government projects GDP growth of 6% to 7% in 2024. However, stakeholders should remain cautious of the potential impact of sustained high inflation on interest rates and mortgage rates.
Key Drivers of Philippine Real Estate Market Growth
Economic Growth
The economic outlook for the Philippines in 2025 reflects a positive trajectory, with the Asian Development Bank (ADB) projecting a GDP growth rate of 6.2%. This forecast, slightly higher than the 6.0% estimated for 2024, is driven by sustained public infrastructure spending under the “Build Better More” initiative, robust domestic consumption supported by remittances, and a recovery in exports, particularly electronics, and services such as tourism and business process outsourcing.
Inflation is expected to moderate to around 3.2%, bolstered by fiscal measures and monetary policy adjustments, creating a favorable environment for investments and household spending. The Philippine government targets an even higher growth range of 6.5% to 7.5% for 2025, reflecting its confidence in the country’s resilience amid global economic challenges.
Urbanization and Infrastructure Development
As urbanization continues to drive real estate demand in the Philippines, major cities like Manila, Cebu, and Davao remain key centers of growth. The demand for residential and commercial properties in these areas is fueled by population migration towards urban centers for job opportunities, education, and improved living standards. This trend is expected to persist, further intensifying competition for both housing and office spaces.
In particular, the condominium market in Metro Manila has seen substantial growth, largely due to the influx of foreign investments and the increasing middle class. The demand for high-rise residential properties is driven by the convenience and lifestyle benefits they offer, particularly among younger professionals. Moreover, foreign investors are drawn to relaxed ownership restrictions on condominium units, which has helped accelerate development in prime urban locations.
Moreover, beyond the capital region, other urban centers like Iloilo and Davao are also experiencing significant development. These cities are becoming attractive options for both residents and businesses, supported by improved infrastructure and increasing economic activity The residential market remains diverse, offering everything from high-end luxury condominiums to affordable housing, with developers focusing on creating mixed-use developments that combine residential, retail, and office spaces to meet the needs of modern city dwellers.
Looking ahead, government efforts to improve urban planning, transport infrastructure, and affordable housing policies will be crucial in managing this rapid urban growth while ensuring sustainable and inclusive development.
Strong OFW Remitances
According to Banko Sentral ng Pilipinas, Overseas Filipino Worker (OFW) remittances are a key driver of the Philippine real estate market, particularly enhancing the purchasing power of the middle class. In 2023, OFWs sent over $37.2 billion back to the country, compared to 36.1 billion in 2023, which helped bolster the financial capacity of Filipino families, especially in the middle-income segment. This influx of funds fuels demand for residential properties, such as affordable and mid-range housing, in urban areas like Metro Manila. OFWs often invest in real estate to secure their future, and their remittances not only support family investments but also provide significant liquidity to the real estate market, contributing to its growth despite broader economic challenges.
Tourism and Foreign Investments
The country’s tourism sector has rebounded significantly, with international arrivals spiking due to eased travel restrictions, promotional efforts, and increased global confidence in the Philippines as a travel destination. Major attractions include pristine beaches, cultural heritage sites, and adventure tourism, which draw millions of tourists annually.
Foreign investments are also growing, fueled by government infrastructure projects, a young and skilled workforce, and incentives for foreign ownership in industries such as real estate and manufacturing. The relaxation of foreign property ownership rules, especially for condominiums, and the government’s push for ecozones and IT-BPO hubs have attracted investors from countries like Japan, South Korea, and the United States.
These developments are creating ripple effects across various sectors, enhancing demand for hospitality services, retail spaces, and mixed-use developments, while positioning the Philippines as a key player in the ASEAN economic landscape.
Increasing Demand for Commercial Places
The increasing demand for commercial spaces is playing a significant role in driving the growth of the real estate market in the Philippines. As the country recovers from the pandemic, demand for office spaces, particularly in Metro Manila, has surged. Businesses are transitioning back to hybrid work models, contributing to a growing need for flexible and prime office spaces.
Moreover, sectors like retail and outsourcing, especially Business Process Outsourcing (BPO), continue to be key drivers of demand for commercial properties. The BPO industry remains a dominant sector, with the Philippines holding a leading position in the Asia-Pacific outsourcing landscape
As the economy grows, companies are expanding and upgrading their office spaces to cater to evolving workplace needs. This upward trend in demand is expected to continue as more businesses return to physical offices and new industries, such as tech startups, require modern, well-equipped commercial spaces. The government’s pro-business policies and infrastructure improvements also contribute to attracting both local and foreign investors, further bolstering the commercial real estate sector.
Overall, the increasing demand for commercial properties aligns with broader economic growth, enhanced by a more robust middle class and a growing consumer base, further solidifying the Philippine real estate market as a prime investment destination.
2 Common Types of Real Estate Investments in the Philippines
Residential Real Estate Properties
These are among the most popular real estate investments in the country, driven by the increasing demand for the housing market due to the growing population and improving economic conditions. Residential investments can range from single-family homes, condominiums, to townhouses. The condominium market, particularly in Metro Manila, has seen significant growth, with foreign investors and Overseas Filipino Workers (OFWs) purchasing properties for either rental or personal use.
Commercial Properties
This type includes office spaces, retail units, and mixed-use developments. Commercial real estate investments are particularly popular among businesses and corporations looking for prime locations in urban centers like Makati, Taguig, and Quezon City. The Philippines’ Business Process Outsourcing (BPO) sector, which remains a key economic driver, fuels the demand for office spaces, making commercial real estate a lucrative investment option.
Both property types are integral to the Philippine real estate market’s growth and offer varying opportunities depending on the investor’s risk appetite and goals.
Benefits of Investing in Real Estate in the Philippines for Foreign Nationals
Strong Market Growth
Despite global challenges, the Philippine real estate market has shown resilience. As the country continues to recover from the pandemic, it is experiencing a robust economic growth outlook with a projected GDP increase of 6-7% in 2024. This translates into a favorable environment for real estate investment. The rise in residential and commercial property demand is supported by growing urbanization and a strong economy.
High Rental Yields
The Philippines remains attractive for rental property investors, especially in key cities like Metro Manila, Cebu, and Davao. The demand for rental properties is being fueled by a young, dynamic population and an influx of overseas Filipino workers (OFWs), along with foreign nationals seeking properties in the country. This results in rental yields that remain competitive compared to other Asian markets.
Foreign Ownership Flexibility
Foreign investors can own condominium units with a maximum of 40% foreign ownership within the building. This provides significant opportunities for foreigners to invest in prime real estate, particularly in the booming condo market. This ownership structure is appealing to those looking to invest in high-demand residential or mixed-use properties.
Diverse Investment Option
Foreign investors can choose from a variety of real estate assets, including residential properties, commercial spaces, and mixed-use developments. With increasing demand for commercial properties due to the growth of industries such as Business Process Outsourcing (BPO), retail, and tech startups, there are numerous opportunities for investment.
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