Key takeaways

• BPO remains the main driver for Philippines real estate but it can also attract FDI in manufacturing and to serve domestic demand
• Data centres are seen as an opportunity, but also as a complex and difficult sector in which to execute successfully
• There is a significant undersupply of affordable housing, especially around transport nodes, which is a potential opportunity for real estate investors

Strong growth and infrastructure developments will boost the prospects for real estate in the Philippines, ULI members heard, at the launch of the ULI/PwC Emerging Trends in Real Estate Asia Pacific 2025 report in Manila.

As well as a presentation of the report by Eric Manuel, director of ARCH Capital Management, the audience saw a panel of industry experts give a view from the Philippines on the report’s findings.

Trends identified by this year’s report, which can be found here, include an increase in the deal pipeline in the last quarter of 2024, rising demand for higher return strategies, an increase in distressed transactions and more interest in emerging markets. Nonetheless, Japan remained the most favoured market, despite concerns about rising interest rates there.

Geopolitical concerns

The 100-plus audience was invited to participate, with a number of topical questions posed. The audience responses revealed that geopolitics was most likely to keep them up at night, followed by higher interest rates and that they were interested in investing in data centres, even though they were only “somewhat” knowledgeable about the sector.

Given $100 million to invest, audience members favoured industrial, data centres and hospitality. From a geographical point of view, the southern Metro Manila area was preferred. However, the office sector was voted as one to avoid. Following recent legislation which allows foreigners to take a 99 year lease of Philippines land, the audience showed strong support for foreign investors being allowed to own land.

Data centres are a relatively new sector in the Philippines and panellist Charlie Rufino, President of NEO Property Management, Inc, was a pioneer in their development. However, he expressed caution over the challenging nature of the sector.

“You have to be prepared,” he said. “Data centre plans always change, because technology is changing as you are building and you’re always adjusting. Furthermore 80% to 90% of your cost is equipment and that changes very fast. In short, it is not for the faint of heart!”

Data centre growth worldwide is being driven by the demands of AI, which is a potential challenge to BPO-driven office markets such as the Philippines.

“The highlight here is we do have a lot of cycles, Rufino emphasized. “Sometimes, when one cycle ends, you have to be ready. You can’t get disrupted. Change will happen very fast.” he added.

“Get ready for change as it also means opportunity,” Rick Santos, Chairman and CEO of Santos Knight Frank noted. He also acknowledged the role of ULI in kickstarting the year, especially in the local and regional property industry. “ULI has become an instrumental part of the Philippine real estate sector growth,” he stated.

Moreover, Christine Chan, Principal Urban Development Specialist (Finance and Investment) at the Asian Development Bank, said: “The Philippines can also tap into and leverage the drive in digital technologies, as well as transition to a higher skilled global capability centre as an innovation hub to service the AI and digital technology industry.”

Not just BPO

There are also opportunities for the Philippines outside the BPO office sector. Panellist Rafael Fernandez De Mesa, President and CEO of Aboitiz Land, cited hospitality as a new area for growth. Tourist arrivals rose nearly 10% in 2024, however the total of 5.9 million is low compared with other Asian locations. Fernandez De Mesa noted that infrastructure needed to improve to allow foreign visitors easy access to Philippine beaches.

He also noted that there were opportunities in manufacturing, even if the Philippines wasn’t the first choice for global manufacturers. “While we may not get Apple or Tesla themselves, it doesn’t mean we can’t get a piece of that value chain. For example, we have an industrial estate tenant, which is a supplier to Apple.” Chan added that there had been increasing interest in investments into the EV supply chain in the Philippines.

Affordable housing continues to be a challenge for the Philippines and Chan suggested building around new transport infrastructure would be an important part of meeting demand from commuters. Transport-oriented development which includes rental housing would see strong demand, she said.

For other perspectives on real estate investing in Asia, members can take a look at last year’s Capital Markets Forum on ULI Knowledge Finder or discover how the markets look in Europe and North America, with Emerging Trends in Real Estate Europe and Emerging Trends in Real Estate Americas & Canada

“Get ready for change as it also means opportunity,” Rick Santos, Chairman and CEO of Santos Knight Frank noted. He also acknowledged the role of ULI in kickstarting the year, especially in the local and regional property markets. “I think we’ve been doing this event successfully for 15 years and its always served as a leading indicator of the road ahead for the property market. No doubt, ULI has become an instrumental part of the growth story in Philippine real estate,” he stated.