Luxury, regional projects emerge as property bright spots — Colliers

THE PHILIPPINE property market in 2026 is no longer riding broad-based momentum. It is operating in a slower-growth environment where investors and developers need to be more selective — and that is exactly where the opportunity lies.

The macro backdrop has clearly softened. The Philippine Statistics Authority reported that the economy grew by just 2.8% in the first quarter of 2026, down from 5.4% a year earlier, reinforcing the view that expansion is losing pace.

At the same time, inflation and borrowing costs remain elevated, tempering demand across price-sensitive residential segments such as affordable and lower mid-income housing (P2.5 million to P7 million per unit).

A TALE OF TWO MARKETS: VERTICAL VS HORIZONTAL HOUSING
The divergence in residential demand is becoming more pronounced, requiring closer analysis from firms such as Colliers Philippines.

Metro Manila’s condominium market continues to grapple with elevated unsold inventory. Vacancy rose to 24.7% in Q1 2026 and is projected to reach 25.6% by year-end, driven by substantial inventory in key submarkets such as the Bay Area.

Demand dynamics also show strain in the mid-market segment, where cancellations are outpacing take-up in lower mid-income housing, signaling affordability and financing challenges. This trend is understandable given persistently elevated mortgage rates.

However, the luxury segment is proving resilient and even outperforming. Prime developments such as Balmori Suites (P690,000 per square meter) and Edades West (P554,000 per square meter) report take-up rates ranging from 92% to 100%, demonstrating strong absorption among high-net-worth buyers.

This divergence is further validated by sustained price appreciation in prime condominium developments.

SUPPLY DISCIPLINE AND THE POST-POGO RESET
While Metro Manila faces headwinds, growth is clearly shifting outward, particularly toward Southern Luzon and other key regional markets.

The Calabarzon region, which contributes 14.8% to national gross domestic product, posted robust economic growth of 5.1% in 2025, reflecting its role as a major economic engine outside the capital region. Importantly, housing demand is closely tied to this regional economic dynamism and expansion.

Horizontal developments are leading the recovery. House-and-lot projects in key localities across Luzon achieved an average take-up rate of 92% as of end-2025, indicating strong end-user demand. Similarly, across areas outside Metro Manila, take-up rates for house-and-lot projects range from 87% to 96%, reflecting healthy demand from end-users, particularly overseas Filipino worker households.

Lot-only developments also show solid performance, with take-up rates ranging from 78% to 96%, supported by buyers seeking larger, more flexible spaces and anticipating future price appreciation.

Infrastructure remains a key enabler of this growth potential. Major projects such as the Cavite-Laguna Expressway and the North-South Commuter Railway, once completed, will improve accessibility, effectively extending Metro Manila’s economic reach.

YIELD COMPRESSION AND CAPITAL VALUE ROTATION
The Philippine property landscape is undergoing a strategic rotation. Colliers Philippines believes that yield compression and elevated vacancy in Metro Manila’s vertical residential segment are pushing both developers and investors toward luxury vertical projects, where scarcity and brand equity sustain pricing power; horizontal developments, where end-user demand remains strongest; and emerging regional markets, supported by infrastructure investments and demographic shifts.

In a softened Metro Manila vertical market, the playbook is clear: follow demand migration, prioritize asset classes with stronger take-up, and focus on corridors where price growth, particularly for land, remains stable.

Colliers Philippines believes that the Philippine property market in 2026 demands sharper strategy, not broader exposure. With macroeconomic expansion moderating and construction costs continuing to rise, indiscriminate expansion is likely to underperform. The winners will be those who embrace rotation — toward luxury vertical developments with pricing power, horizontal projects with proven end-user demand, and regional corridors unlocked by critical public infrastructure.

Metro Manila’s condominium market underscores the need for discipline, while suburban and provincial markets validate the ongoing shift in demand. In this environment, success hinges on precision: aligning product, price, and location with evolving affordability and viability patterns.

The message for real estate firms is clear: growth remains, but it is no longer everywhere. Developers must deliberately identify and capture it.

Joey Roi Bondoc is the director and head of Research of Colliers Philippines.

joey.bondoc@colliers.com