The Philippine real estate market remains resilient, with the high-end residential and retail segments showing strong growth as infrastructure projects and evolving consumer behaviors shape future opportunities, according to real estate consultancy firm Santos Knight Frank (SKF).
Growth in prime and mid-market segments
Metro Manila maintained its position as a global leader in luxury real estate, with residential prices growing by 29.9 percent year-on-year—the highest worldwide—according to Knight Frank’s Prime Global Cities Index.
SKF’s director for consultancy services Lovelle Taleon attributed the surge to strong demand for high-value properties and limited supply in key areas such as Makati, where prime villages saw a compound annual growth rate (CAGR) increase to 17 percent from 13 percent in 2024.
She said the recent opening of the LRT-1 Cavite extension is expected to further boost property values along its route.
“Public transport infrastructure like the LRT-1 extension drives real estate demand near transit hubs and unlocks investment opportunities,” Taleon noted.
Meanwhile, the mid-market segment is also gaining momentum, with new projects planned between 2025 and 2026 to meet rising demand and address inventory shortages outside Metro Manila.
Residential properties outside the capital region recorded a 4.2 percent annual price increase, underscoring opportunities for growth beyond urban centers.
Despite this optimism, vacancy rates in residential developments have slightly increased in some areas due to slower leasing activity and competition from new supply.
However, demand is expected to pick up in the coming quarters, particularly near transport-oriented developments.
Retail sector: Evolving with consumer trends
The retail sector continuous to experience resurgence as e-commerce brands integrate physical stores into their strategies.
Metro Manila’s mall occupancy rates average 90 percent, with Taguig and Quezon City leading at 92 percent, followed by Makati at 90 percent.
“E-commerce brands are expanding into brick-and-mortar spaces to provide personalized experiences and showcase products that are harder to represent online,” Taleon explained. Brands like Love, Bonito have embraced this online-to-offline (O2O) model, strengthening customer engagement and brand visibility.
Despite strong occupancy rates, pockets of vacancies persist, particularly in older malls and less strategically located retail spaces.
However, these are being gradually absorbed by new entrants and expanding food and beverage (F&B) operators. New malls are filling up quickly, driven by high demand from both international brands and local businesses adopting hybrid retail models.
The Bangko Sentral ng Pilipinas’ policy to lower interest rates has further encouraged spending, making it easier for businesses to expand and for consumers to invest in big-ticket items like real estate.
Positive market dynamics
Across residential and retail sectors, infrastructure improvements, like the LRT-1 Cavite extension, and innovative business strategies are setting the stage for sustained growth.
Developers are focusing on both ultra-high-end and mid-market properties, while the retail sector continues to adapt to hybrid consumer preferences.
While vacancy rates remain a challenge in certain segments, they are expected to decline as demand strengthens and new opportunities emerge.
