The country’s real estate market is seeing opportunities for it to reposition itself towards resilience and sustainable long-term growth driven by policy reforms that will strengthen investor confidence, a commercial real estate services firm said.
In a media briefing in Makati City, Santos Knight Frank chairman and CEO Rick Santos said 2025 was a year marked by purposeful pivots and structural shifts across the Philippine real estate landscape.
“I think that from a real estate perspective, this is a time of great opportunity for the property market, and a time for a reset or repositioning in the market,” Santos said.
He stressed that the signing of the 99-year land lease into law, along with progressive amendments to the REIT framework, signals a strong policy environment—one that broadens the universe of acceptable assets and unlocks new channels for long-term investment.
Santos pointed out that the market is seeing growth decentralize, with major developments rising in Cebu, Pampanga, Davao, and New Clark City—signaling a more diverse economic trajectory.
“Across sectors, the market is recalibrating: office supply continues to expand, hospitality is enjoying one of its strongest cycles, retail is moderating, and residential pressures are opening attractive opportunities in the secondary market,” Santos said.
99-year land lease to support investments
SKF noted that the signing of the 99-year land lease marks a pivotal step in strengthening the country’s investment landscape. The measure extends the lease term of land to 99 years from the previous 75 years, which was composed of an initial 50 years plus a one-time renewal of 25 years.
“By offering long-term security of tenure, the policy enhances the bankability of major developments, increases the country’s competitiveness for foreign capital, and unlocks opportunities for large-scale, long-gestation projects,” SKF said.
The commercial real estate services firm said the measure encourages deeper partnerships between local landowners and foreign investors, supports the growth of REITs, and boosts overall confidence, liquidity, and productivity across the real estate sector.
It added that the policy also aligns the Philippines with ASEAN peers that already offer extended lease terms, positioning the country more competitively for foreign direct investment.
“With long-term lease security in place, demand for land in strategic locations is poised to rise–driving land values upward, accelerating new developments, and reinforcing a positive trajectory for the Philippine real estate market in the years ahead,” SKF said.
CMEPA to boost REIT market
Aside from the land lease extension, Santos cited the Capital Markets Efficiency Promotion Act (CMEPA) as another measure that brings opportunities for the country’s real estate market.
He explained that lower capital taxes enable real estate firms to raise funds more accordingly through equity and REIT offerings.
“Tax reductions for mutual funds and UTIFS encourage greater investment in real estate assets like REITs and property stocks,” SKF said.
It added that the 10 percent harmonized dividend tax for non-residents enhances the global competitiveness of the Philippine real estate assets, attracting more investments.
Office vacancy trickling down
SKF data showed that year-to-date net absorption registered at 461,245 sq.m., largely driven by expansions from the IT-BPM industry. Metro Manila’s office stock now totals 8.9 million sq.m., with an additional 328,000 sq.m. delivered as of November 2025.
It added that Metro Manila’s office pipeline remains robust, with over 1.5 million sq.m. scheduled for completion through 2029—primarily in Quezon City, Taguig, and Ortigas—though moderated timelines are expected as developers adjust to tempered demand.
The commercial real estate services firm reported that Metro Manila office vacancy registered at 21 percent in November. SKF senior director for occupier strategy and solutions, Morgan McGilvray, noted that vacancy in the Metro Manila office market is trickling down compared to the high rates recorded during the pandemic.
“At peak, it was probably 30 percent during the pandemic, and it’s been slowly trickling down. It’s now at 20 percent. We could see it getting into the teens, for sure. And that might be high compared to the 5 percent we saw in 2019, but by a global standard, to have vacancy rates in the teens, that’s actually a pretty strong market. A high vacancy rate could be 40 percent, 50 percent, as we’re seeing in other markets around the world. So teens are really, actually pretty strong markets,” McGilvray said.
Residential and retail see shifts to provincial
SKF reported that developers are increasingly positioning new projects just outside Metro Manila as buyers seek more space, improved livability, and more accessible price points.
“This shift is driving activity in nearby growth corridors, where developers are rolling out not only horizontal communities but also mid-rise residential formats to meet evolving demand,” SKF said.
At the same time, Metro Manila’s pipeline continues to be defined by premium and high-end developments, including Ayala Land Inc.’s Laurean Residences and Megaworld’s Uptown Modern, both with target completion for 2030.
SKF said Manila retains its place in the global luxury landscape, ranking 5th in Knight Frank’s Prime Global Cities Index, supported by a 9.1 percent y-o-y increase in prices—further underscoring the city’s status as an affordable yet fast-appreciating luxury market.
Similar to the residential sector, the retail landscape is experiencing a wave of new mall completions in key provincial locations, with major developers introducing formats that mirror the scale and quality of Metro Manila’s premier retail destinations.
“Optimism remains strong, particularly in northern Luzon and southern Mindanao, where sustained consumer growth is driving continued expansion,” SKF said.
Moreover, it emphasized that 2025 also marked a steady rise in global brand activity, supported by government initiatives that streamline the ease of doing business.
It highlighted the entry of global brands from lifestyle fashion labels such as Maje, Alice + Olivia, and Sandro; to hobby and sports names like Alo, Oysho, and Wilson; to high-end F&B concepts including Smith & Wollensky, Niku Niko Oh!! Kome, and Dave & Buster’s.
“With strong consumer demand and an increasingly business-friendly environment, we anticipate even more global brands making their mark in the Philippines—further elevating the country’s retail landscape and bringing world-class experiences closer to more Filipinos,” SKF said.
Data centers power opportunities in the industrial market
SKF said that the evolving industrial demand has bolstered the industrial sector into a new direction, shifting from the traditional dry warehouse to specialized industrial facilities such as data centers, cold storage, and smart manufacturing storage warehouses.
It stressed that the data center industry is optimistic as more players continue to locate in the country. It cited data from the Department of Information and Communications Technology (DICT), noting that the Philippines’ data center capacity could reach 1.5 gigawatts (GW) by 2028 as more operators, both local and foreign, continue to set up facilities in the country in the coming years.
“Cloud services and digital transformation are driving the demand for this industry,” SKF said.
It added that more industrial parks/estates are being launched in the country, emphasizing that CALABARZON and Central Luzon remain the hotspots for this industry with their proximity to ports and the metro.
“So, it’s not all doom and gloom out there for the property market. We see some real opportunities with some of these new legislations that have been passed and are about to be passed. We see this as an opportunity to help reset, pivot, redevelop,” Santos said.
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