By Juliana Chloe A. Gonzales
THE PHILIPPINE property sector is anticipated to slow within the second half because the Iran war, elevated oil prices and chronic inflation raise costs and weaken demand, prompting developers to delay projects and adopt a more cautious approach.
Analysts said higher fuel and construction costs, elevated borrowing rates and weaker consumer purchasing power are more likely to weigh on residential, retail and hospitality segments through the remainder of 2026, although industrial and outsourcing-related property demand might provide some support.
Joey Roi Bondoc, director for research at Colliers Philippines, said the impact of the war on fuel and provide chains could proceed to pressure developers and buyers.
Developers have began delaying construction and marketing some projects in anticipation of weaker demand, he told BusinessWorld in a video call.
“The Middle East covered about 18% of total remittances to the Philippines in 2025, in order that is pretty significant,” he added.
Claro dG. Cordero, Jr., director for research at Cushman & Wakefield Philippines, said prolonged war within the Middle East would proceed to affect oil markets even when tensions ease.
“Even when de-escalation occurs, oil production and trade through the Strait of Hormuz will take time to normalize,” he said in an e-mailed reply to questions.
He said higher oil prices would eventually filter through to transportation, utilities and consumer expenses, squeezing household purchasing power in a rustic heavily depending on imports.
Cushman & Wakefield also said inflation risks could spur the Bangko Sentral ng Pilipinas (BSP) to maintain benchmark rates of interest elevated.
Mr. Bondoc said the BSP’s cumulative 200-basis-point policy easing has yet to translate into substantially lower mortgage rates.
“Until we see a major reduction in mortgage rate, I feel we won’t see a considerable spike in condominium take-up within the Metro Manila pre-selling market,” he said, noting that five-year mortgage rates remain at about 7.7% to 7.8%.
The condominium segment in Metro Manila continues to face a big supply overhang, with about seven years’ price of unsold inventory, in accordance with Colliers.
Consequently, developers are increasingly shifting toward horizontal housing projects in provincial growth areas similar to Cavite, Laguna and Batangas, where demand is driven more by end-users than speculative buyers.
“It doesn’t make economic sense at this point to begin constructing more vertical projects in Metro Manila,” Mr. Bondoc said.
Colliers added that provincial house-and-lot projects proceed to post strong average take-up rates of about 90%, partly because overseas Filipino staff are less more likely to stop paying for homes occupied by their families.
Despite the challenges, analysts said some property segments are expected to proceed performing well.
Mr. Cordero said logistics and industrial developments, information technology and business process management (IT-BPM) office spaces and the high-end residential market are more likely to outperform.
“Logistics and industrial profit directly from supply chain restructuring, as occupiers seek larger, strategically positioned warehousing near major transport nodes to protect against disruption,” he said.
He added that tighter budgets amongst global firms could still support Philippine outsourcing demand because firms proceed to hunt lower-cost operating locations.
John Corpus, executive director for tenant representation at Savills Philippines, said a weaker peso could further improve the country’s competitiveness for export-oriented industries and outsourcing firms.
Nevertheless, he noted that many business process outsourcing firms and global capability centers remain cautious about expansion due to economic uncertainty and rapid technological change.
“Consequently, occupiers are expected to stay selective and strategic of their expansion decisions,” Mr. Corpus said via Viber.
Savills also cited geopolitical risks involving Taiwan and domestic political uncertainty ahead of the 2028 election cycle as aspects that would affect investor sentiment.
“Investors generally prefer stability, policy continuity, and a powerful concentrate on economic priorities,” Mr. Corpus said.
Analysts said developers should prioritize operational efficiency and punctiliously phase projects as a substitute of pursuing aggressive expansion.
In addition they advisable locking in material costs early and investing in energy-efficient infrastructure and renewable energy systems to scale back operating costs for tenants.