The real estate market is seeing a revival

According to Santos Knight Frank (SKF), a leading global real estate services firm, the Philippine real estate market showed a remarkable recovery in the first half of 2024, driven by a strong rebound in the hospitality sector and increasing demand for office space.

“The Philippine real estate market is approaching pre-pandemic levels. Strong demand in the commercial and residential sectors heralds a promising future,” said SKF President and CEO Rick Santos.

The Bloom of Hospitality

The hotel sector is booming, with 2024 set to be a record year for new hotel openings. In the first half of the year alone, five new hotels were partially opened, adding over 2,900 rooms to the market once fully completed.

Upcoming openings in the second half of 2024, including Somerset Valero Makati, Seda One Ayala and Ascott DD Meridian Park, will bring nearly 900 additional rooms.

According to SKF, the increase in tourism is not limited to Metro Manila, as popular destinations such as Cebu, Davao, Palawan, Subic, Baguio and Cagayan de Oro are also seeing significant growth in the number of hotel projects.

Office Sector Revival

Demand for office space in Metro Manila more than doubled in the first half of 2024, exceeding total net absorption for the full year of 2023.

“Return-to-office orders and office expansion, supported by offshoring operations, have led to a doubling of office demand, surpassing 2023 demand in Metro Manila. We expect this to continue as the Philippines remains one of the most competitive offshoring hubs in the Asia Pacific region, driven by a young talent pool, affordable operating costs and a solid supply of office space,” Santos said.

Taguig emerged as a preferred office location, boasting a lower vacancy rate of 14.5 percent, compared to Metro Manila’s average of 18.9 percent.

The highest average asking rent in Makati is PHP 1,256 per square meter per month, followed closely by Taguig at PHP 1,250 per square meter per month.

Luxury market

The luxury real estate market is pushing boundaries, with new developments like Park Villas in Makati City and Banyan Tree Residences Manila Bay in Pasay City approaching a selling price of PHP 1 million per square meter.

This trend places Manila among the cities with super-attractive market areas, where projects are valued at at least $10 million per unit.

Meanwhile, strong demand and limited availability in major Manila villages continue to drive capital growth. Forbes Park and Ayala Alabang lead with a 13 percent increase, rising from P580,000 per square meter and P250,000 per square meter, respectively, in 2023.

The villages of Dasmariñas and Magallanes also saw significant increases, with increases of 12 percent in each case.

Reconstruction of the shopping center

Shopping mall redevelopment projects are underway across Metro Manila, with an emphasis on resource efficiency and experiential offerings. The goal of these renovations is to maintain the relevance of brick-and-mortar retail amid growing online shopping trends.

Ongoing redevelopment projects include the transformation of Robinsons Forum and Greenbelt 1. Trinoma, Glorietta and Greenbelt 2 are undergoing renovations and improvements, while work is underway on Shangri-La Plaza, Market! Market!, SM Megamall and other yet-to-be-confirmed SM malls.

Meanwhile, the industrial sector is expanding beyond Metro Manila, with activity concentrated in the southern and Clark provinces. Logistics remains a key driver, alongside growth in emerging subsectors such as semiconductors, pharmaceuticals and electric vehicle manufacturing.

Looking to the future

The solid performance of the Philippine real estate market in the first half of 2024 heralds a bright future.

“Overall, we are optimistic that the market is almost back to pre-pandemic levels. Strong demand in the commercial and residential sectors indicates a promising outlook for Philippine real estate,” Santos said.

With further growth expected in the hospitality, office, residential and industrial sectors, the market is well positioned for sustained success.