The Philippine real estate sector continues to demonstrate steady growth in the first half of 2025, defying global volatility.
According to global real estate services company Santos Knight Frank, the office sector is taking the lead with occupancy levels rising as more business process outsourcing (BPO) firms choose to expand within Metro Manila, reaffirming its position as a top outsourcing destination.
“The current geopolitical climate is marked by rapid and unpredictable changes, creating uncertainty for investors, businesses, and consumers alike. Despite this, the Philippine real estate sector continues to demonstrate remarkable resilience, anchored by strong market fundamentals, proactive government policies and growing domestic demand,” said Rick Santos, chair and CEO of Santos Knight Frank.
“We continue to see steady demand in the office market from BPO and traditional occupiers. The industrial sector is expanding steadily, driven by growth in manufacturing, logistics, and storage. In residential, Manila continues to position itself as an affordable luxury market, while the hospitality sector is regaining strength with an expanding hotel pipeline across key destinations. As economic tides shift, real estate reaffirms its place as the gold standard of investment — offering long-term value, enduring stability, and tangible growth opportunities,” Santos explained.
Sustained office demand
Net absorption this first half of 2025 stood at 192,000 sqm, driven by move-ins and expansions from the BPO industry. Metro Manila office market’s supply reached to 8.8 million sqm with the introduction of 158,000 sqm of new office stock.
More than 403,000 sqm of office stock is expected to be completed in the latter part of the year, with an additional of more than half a million square meters over the next five years.
More BPO companies continue to choose Metro Manila as their preferred office destination with the launch of more Grade A and Prime buildings especially in BGC, Taguig and Makati. Taguig now has the lowest vacancy rate of 15 percent and the highest average asking rate at P1,248 per sqm per month — 21 percent higher than the overall average of P1,024 per sqm per month. Makati follows at 17 percent vacancy rate and P1,220 per sqm per month asking rate.
‘Affordable’ luxury residential market
Manila continues to retain its position in the super prime market, placing 9th in Knight Frank’s Prime Global Cities Index in Q1 2025, with a 5.5 percent year-on-year increase in prices. Globally, this makes Manila an “affordable luxury market” that provides more value for its consumers compared to other markets in the Asia Pacific.
Meanwhile, prime villages in Metro Manila continue to demonstrate steady growth in the first half. Forbes Parks leads with a 15 percent increase to P825,000 per sqm, followed closely by Dasmarinas, Magallanes and Ayala Alabang at 14 percent.Limited availability and exclusivity continue to drive the demand in these exclusive subdivisions.
Industrial hotspots
Calabarzon and Central Luzon solidified their status as key industrial hotspots, attracting strong interest from foreign enterprises seeking operational efficiency and access to critical infrastructure.
Average rents in these areas range from P230 to P290 per sqm per month — offering competitive rates for companies in manufacturing, pharmaceuticals, and cold storage. These sectors are driving sustained demand for industrial space.
Resurgence of iconic hotels
Iconic hotels Sofitel and InterContinental are making a comeback in new strategic locations namely Cebu and New Clark City in Tarlac, respectively, reflecting a renewed confidence in the tourism sector and a shift in hospitality strategy.
Major hotel operators are partnering with local developers to establish more high-end hotels attracting higher-spending tourists, increasing average length of stay and tourist spending to help boost tourism revenue. From Accor’s partnership with Megaworld for Mercure; Marriott International and CG Hospitality for the rebranding of The Farm at San Benito, Autograph Collection; to Banyan Tree and Hann Resort in New Clark City.
