The Philippines’ real estate remains one of the largest flourishing industries in the country and it has shown notable resiliency despite the multiple setbacks brought on by shifting economies, development in international ties, and even the global pandemic. Both the residential and commercial space markets in the Philippines continue to grow at a sure and steady pace, and this is clearly reflected in its remarkable performance during the first quarter of the year– with progress that is persisting in the final months of 2023. The state of the Philippines’ real estate industry is truly something to keep an eye on as it continues to gain profit and expand its market.
Despite various challenges faced by the Philippine real estate industry, the market has performed well in Q32023 and predictions of its continuous growth and recovery in the final quarter of the year are proving to be feasible amid economic fluctuations and pandemic-induced struggles. While there are still uncertainties regarding the capability of the Philippines’ real estate industry to match its performance during prior fiscal years, the market remains to expand and revive itself. In this article, we will explore the state of the Philippine real estate industry in the final quarter of 2023.
Exploring the State of the Philippine Real Estate Industry in Q4 2023
Image from Phil Property Expert
Both international and domestic business groups share optimism for the Philippines’ real estate market. According to the Manila Times, leading Philippine real estate companies like Ayala Land and Megaworld Corp. both report significant increases in real estate project launches while international real estate management firm Colliers International continues to express optimism in the resurgence of the Philippine real estate industry. With continuous projects launched in the country, the market also continues to expand and increase profits into the final quarter of 2023.
“Because of the adjustments, business has indeed been booming and there are plenty of developments left and right. In fact, many of them have been running campaigns with us, and also a lot of projects have been coming out monthly,” said Dot Property Philippines country manager Tanya Peralta-Yu in an interview with the Manila Times.
As the country proceeds to adjust back into the ‘new-normal’ post-pandemic, the commercial space sector of the real estate industry is also showing signs of a notable shift. According to data released by international real estate services firm Cushman & Wakefield, office spaces in the Philippines, particularly in Metro Manila, experienced a slight, yet still significant YoY decline in a vacancy in the final part of Q3 2023– a development expected to progress in the final quarter of the year. The upsurge of remittances expected to enter the country in Q4 2023 is also expected to significantly increase the acquisition of land properties in the Philippines, and this positive trend is expected to continue until the first quarter of 2024.
The Effects of the Real Estate Industry on the Construction Industry and Retail of Construction Supplies
The steady growth of the Philippine real estate industry has a significant impact on both the construction industry and the retail of construction supplies. The continuous launching of real estate projects both in residential and commercial sectors has directly influenced the steady improvement of the construction industry and the retail of construction materials. According to Yahoo! Finance, the Philippines’ construction industry is still expected to expand by 7% as supported by the continuously increasing infrastructure projects by the Philippine government and the real estate projects of Philippine property development companies like Ayala Land and Megaworld Corp.
In 2023, the construction industry grew by over 10%, as influenced by multiple factors, including the country’s reviving real estate market. According to data released by the Philippine Statistics Authority, the construction industry’s value has been continuously growing since the third quarter of 2022 and has been persistent in upward movement until the same period this year.
Data from Yahoo! Finance
The retail of construction supplies is also influenced by this development, although the market prices are also affected by multiple other factors such as inflation and international ties with buyers and suppliers. According to data released by the Philippine Statistics Authority, the retail price index of construction materials has experienced a drastic plunge from 6.9 in the third quarter of 2022, to 1.4 in the same quarter of this year. While no sufficient data is yet available to suggest that this trend in price index decrease will continue in the final months of 2023, recent data shows that the price index fell to 1.1 in October 2023.
Image from Philippine Statistics Authority
Forecast for the Philippine Real Estate Industry in 2024
Image from Colliers
Both residential and commercial property investment by local and international buyers have been increasing in the latter half of 2023 and it is expected to extend into the first quarter of next year. While there are headwinds brought on by various factors, office space vacancy is plunging, as reflected in the 43% decrease in vacated commercial spaces in the first half of 2023 as compared to the same period during the previous year. In the residential sector, Filipino expats and OFWs are expected to influence a significant upturn in the market as the living conditions in the country continue to improve and domestic investments in property are becoming more attractive to pursue. The Philippine real estate industry is forecasted to continue its revival and expand more as development projects increase and investors shift their preference towards the Philippine market.
- Chua, J. (2023, September 26). PH property market’s resurgence has arrived on the dot. Manila Bulletin. Retrieved November 23, 2023, from https://mb.com.ph/2023/9/26/ph-property-market-s-resurgence-has-arrived-on-the-dot#google_vignette
- Cordero, C. (2023, November 13). Philippine MarketBeat | Philippines. Cushman & Wakefield. Retrieved November 23, 2023, from https://www.cushmanwakefield.com/en/philippines/insights/philippine-marketbeat
- Lobien, S. (2023, July 17). A proof of real estate resiliency and recovery. Inquirer Business. Retrieved November 23, 2023, from https://business.inquirer.net/410398/a-proof-of-real-estate-resiliency-and-recovery
- Salting, E. P. (2023, October 11). Outlook bright for PH property sector — analysts. The Manila Times. Retrieved November 23, 2023, from https://www.manilatimes.net/2023/10/11/tmt-anniversary/outlook-bright-for-ph-property-sector-analysts/1913937
- (Philippines Construction Industry Report 2023: Market Is Expected to Expand by 7% in Real Terms in 2023 Following 12.1% Growth in 2022 – Forecasts to 2027, 2023)