THE PHILIPPINE property sector is prone to experience an uneven recovery across its segments this yr, as economic uncertainty and geopolitical tensions proceed to dampen investor sentiment, in line with property consultancy firm Cushman & Wakefield (C&W).
Nonetheless, the firm expects short-term appetite for prime assets with strong demand, it said in its latest Philippine Office and Investment MarketBeat Report.
“Over the following 12 to 18 months, expect renewed appetite for acquisitions — particularly in logistics and industrial assets, which remain strong demand drivers, in addition to prime office and residential properties,” said Claro dG. Cordero, Jr., C&W director and head of research, consulting, and advisory services.
The uneven recovery across property segments can be being influenced by recent policy rate adjustments, that are affecting financing costs and investor sentiment.
The benchmark rate of interest currently stands at 4.5%, the bottom in over three years. The Monetary Board has delivered 200 basis points (bps) in cuts since starting its easing cycle in August 2024, including five straight 25-bp reductions last yr.
“Sustained monetary easing by the Bangko Sentral ng Pilipinas (BSP) and supportive reforms can drive renewed capital inflows and enhance risk-adjusted returns across investment-grade real estate,” Mr. Cordero said.
BSP Governor Eli M. Remolona, Jr. earlier said a cut is feasible at this month’s meeting if there’s a must support domestic demand, particularly after economic growth slumped to a five-year low in 2025.
Nonetheless, he noted on Wednesday that inflation returning throughout the goal range last month and expectations of economic recovery amid renewed confidence can have narrowed the room for further easing. The Monetary Board’s next policy meeting is scheduled for Feb. 19.
This yr, office developments in prime central business districts (CBDs) are expected to stabilize, with quicker rental rate rebounds projected within the second half, while non-CBD areas may lag as a consequence of sluggish demand, slow space absorption, and gradual emptiness improvements.
“Overall, market demand is being supported by a combination of expanding IT-BPM (information technology and business process management) operations and renewed leasing activity from traditional occupiers, that are helping to underpin the recovery momentum across the office sector,” the firm said.
Global Capability Centers (GCCs) within the Philippines are also poised for sustained growth, driving demand for high-quality office spaces in CBDs tailored to their operational needs.
The report noted that landlords are increasing redevelopment and retrofits of aging buildings with green upgrades.
“While this will temporarily remove older stock from the market, the trend is anticipated to strengthen long-term competitiveness and enable aging buildings to raised compete with newer office developments,” Mr. Cordero said, adding that these upgrades should match tenant expectations, enhance constructing value, and help properties stand out in competitive urban hubs.
Metro Manila office emptiness rates improved barely within the fourth quarter of 2025, driven by CBD demand exceeding recent supply despite rental and availability pressures.
CBD-led demand outpaced recent supply in key districts, alongside shifts in occupier preferences toward modern, sustainable workspaces.
“The Philippine office market continued to realize traction in 2025, with expansion within the IT-BPM industry and recent entrants supporting demand. While the general emptiness rate stays elevated, outperforming sub-markets comparable to Bonifacio Global City (BGC) and Makati reflect stronger occupier interest, indicating a growing preference for high-quality, centrally positioned spaces,” Tenant Advisory Group Director Zory Mangelen said.
Emptiness rates in core CBDs comparable to Makati, BGC, and Ortigas Center improved to 10.4% from 10.9%, supported by regular IT-BPM and multinational leasing.
Nonetheless, this was not enough to forestall rents from falling from P1,114 to P1,093 per square meter (sq.m.) per thirty days, as some high-vacancy buildings reduced rates within the fourth quarter to draw tenants.
“CBD rental rates contracted by 1.89% quarter on quarter, with average rents declining by 1.9% to P1,093 per sq.m. per thirty days, as some landlords implemented rate reductions to enhance occupancy,” the firm said.
“Decentralized markets remain subdued, with rents flat at P815 per sq.m. per thirty days and vacancies still elevated at 25.7%,” it added.
Based on the report, limited space in core CBDs means landlords in other submarkets should review project timelines and increase supply delivery to fulfill ongoing demand in stronger segments.
“Early indicators of renewed activity within the prime office segment suggest that developers and landlords must anticipate evolving occupier requirements by prioritizing modern designs, sustainability certifications, and versatile configurations,” Mr. Cordero said.
Prime and Grade A properties in Makati, BGC, and Ortigas held regular, but rental softening continued. Prime and Grade A office vacancies across Metro Manila narrowed by 40 bps quarter on quarter, from 18.3% to 17.9% in Q4 2025.
Estimated average office yields for Prime and Grade A developments dipped barely to six.92% — a one-bp decline each quarter on quarter and yr on yr — indicating cautious investor sentiment. — Alexandria Grace C. Magno