The Philippine economy remains a rising tiger, posting a steady 5.8% quarterly growth in 2024Q4. While slightly below the target, this solid growth of over 5% places the Philippines ahead of many ASEAN and Asian peers. Inflation held firm at 3.22%, ensuring a stable macroeconomic environment. To further ignite momentum, the Bangko Sentral ng Pilipinas (BSP) slashed interest rates three times in 2024, bringing them down to 5.75%—a strategic move to fuel investments and business expansion.
The industrial sector continues to be the marvel in the property market, with robust output and surging demand powering economic resilience. Foreign investments climbed 3.8% YoY as of September 2024, with Investment Promotion Agencies (IPAs) securing a staggering PHP
1.62 trillion in foreign pledges—signaling strong international confidence in the country’s economic trajectory.
Key drivers of growth in 2025
PRIME Philippines forecasts another breakout year, with economic expansion fueled by massive infrastructure projects. The government has earmarked PHP 1.28 trillion for infrastructure and capital outlay for 2025, while NEDA-approved flagship projects now total PHP 9.14 trillion—a testament to the country’s unwavering commitment to progress.
With foreign direct investments (FDIs) surging, especially from Western economies, the Philippines is becoming an investment powerhouse. Meanwhile, domestic consumption is poised for liftoff, driven by stabilized inflation and resurgent consumer confidence. The fusion of brick-and-mortar stores with e-commerce is reshaping the retail landscape, while AI adoption and digital transformation are supercharging efficiency and productivity across industries.
Real estate market: A dynamic industry
Logistics and manufacturing remain the lifeblood of industrial demand, with spaces between 1,000 and 5,000 sqm in high demand. Luzon’s industrial occupancy rate stands tall at 97%, with Grade C warehouses accounting for most vacancies. Davao is emerging as a logistics hotspot, yet both Cebu and Davao face a critical warehouse supply crunch.
In the office sector, the tenant’s market persists, with Cebu witnessing an office glut, while Davao grapples with an undersupply amid surging demand. Prime CBDs—BGC, Makati, and Ortigas—are at the heart of office recovery, leading office space absorption and bolstering occupancy levels. Cebu experienced a notable dip in lease rates, while Davao saw mild appreciation.
For retail, the F&B sector is king, accounting for 41% of total retail space demand in 2024. Standalone restaurants are rising, and convenience and discount stores are waging a fierce expansion battle, moving aggressively into suburban and provincial markets, with discount chains now making bold moves into Metro Manila.
There is a shake-up in the residential sector, albeit justifiable. The so-called “condominium crisis” isn’t merely an oversupply issue—it’s an intricate dance between property values, purchasing power, and rental yields. The glut is most pronounced in areas once heavily reliant on the now-defunct POGO industry. Buyer appetite has weakened, as declining household incomes, falling rental yields, and surging transaction taxes—amplified by increasing zonal values—have placed pressure on demand. High-end and luxury products, however, remain resilient as their prices are holding up contributing to the modest value appreciation of 3% in Metro Manila.
Looking ahead: The road to prominence
PRIME Philippines sees the nation’s edge sharpening across key sectors:
A Workforce Built for the Future – With a young, skilled, and tech-savvy labor pool, the Philippines is a magnet for global industries—expanding beyond BPOs to manufacturing and digital services.
A Strategic Gateway to Asia-Pacific – The country is strengthening its connectivity with the Build Better More program, delivering roads, bridges, airports, seaports, and telecom advancements that will reshape the investment landscape.
Data Center Boom is Coming – The Philippines is late to the data center (DC) race, but it is charging ahead. Within three years, over 100 DCs are set to go live, solidifying the country’s digital backbone.
A Food & Logistics Powerhouse in the Making – With a population exceeding 100 million and 40.9% of household budgets allocated to food and beverages, the food processing, logistics, and storage industries are primed for massive expansion.
Breaking Down Business Barriers – The country’s push for efficiency is accelerating, with digitalization efforts, the Anti-Red Tape Act (ARTA), and government automation transforming the ease of doing business.
PRIME Philippines’ bold outlook
As the Philippines steps into 2025, all signs point to sustained growth. With a thriving industrial sector, surging foreign investments, stabilizing domestic consumption, and an evolving real estate market, the country is cementing its position as one of Asia’s most dynamic economies. The next chapter of Philippine economic growth is being written. Will you be a part of it?
At PRIME Philippines, we remain steadfast in our mission—delivering cutting-edge insights and innovative solutions that empower businesses to seize the moment and shape the future. A real estate consultancy firm ready to provide your business with solutions regardless of the stage you are in.
