The real estate market in the Philippines is expected to remain rosy this year (2024) despite a current mismatch between demand and supply in certain segments. This summarizes the ‘2024 Panorama,’ an annual review of the country’s property landscape released by real estate brokerage and consultancy firm KMC Savills.
“Upcoming office completions are set to invigorate leasing activities,” said newly appointed KMC Savills CEO Joe Curran during the presentation of KMC Savills Research and Consultancy’s annual panoramic outlook on February 22, 2024. “Demand is seen to sustain for 2024, while an increase in vacancy rates is expected due to the upcoming multiple office building completion for the year.”
According to Curan, BGC in Taguig City is still “the favorable location for prime buildings,” leading all submarkets with more than 2 million in office stock and an incoming supply of about 182,000 sq m, which is the highest in all submarkets in Metro Manila for the past year. 
However, noteworthy transactions also occurred in the last quarter of 2023, with about 110k sq m of space taken. Leading the charge are the new buildings in Makati, reaching high occupancy rates despite the competitive office landscape.
Metro Manila office lease rates have stabilized post-pandemic to an average of 858 pesos per sq m down by 6.7% from pre-pandemic rates. Remarkably, Iloilo’s lease rates have increased through the pandemic due to the constant demand from IT-BPM sector which is seen to continue its expansion outside Metro Manila where there is deemed to be a larger talent pool and relatively lower wages.
Meanwhile. KMC Savills COO Cha Carbonell shared insights about the country’s industrial sector. “Manufacturing and Logistics are paving the way for industrial hubs” with Manufacturing accounting for nearly half—41% of the current tenant market. Laguna is reported as the primary location for over half of the warehouse stock. Elevated vacancies, however, may pressure warehouse rents. Particularly noteworthy are the significant decreases in the rental rates of Bulacan, which went down by 42% and Pampanga by 21%,” she shared. 
KMC Savills Research and Consultancy Associate Director Joshua De Las Ala highlighted a trend in the residential sector in PH. He pointed out the middle-market consumers are shifting to PAGIBIG for financing construction or acquisition of their dream homes outside the metro.
“On top of rising interest rates, the need to live near the place of work has declined, leading to the slowdown in mid-market condominium sales. On the other hand, developers are now putting more focus on high-end and luxury developments, which make up 60% of the new launches for the past 2 years. Notably, the Metro Manila market has only sold 65% of the 113,000 units floated, both for pre-selling and RFO units. Around 40,000 units are still left unsold, half of which are from mid-market developments,” he said.
Overall, KMC Savills has expressed confidence that the local real estate market will continue to pick up. The firm remains optimistic about the office, retail, and hospitality sectors. At the same time, it is also wary of the apparent mismatch between the demand and supply in the industrial market and the possible saturation of the mid-end residential market. KMC Savills also advises the emerging markets to consider the opportunities brought about by the rise of renewable energy and the data center industry, which are both in the early stages in the country.
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