Philippine Real Estate Shows Resilience Amid Regional Economic Slowdown

The Philippine real estate sector grew by 6.8 percent year-on-year in the first quarter of 2026, significantly outperforming the broader national economy. This growth comes despite a lowered GDP forecast for the country and a contraction in the construction sector caused by suspended public infrastructure projects. The industry's resilience is being tested by global geopolitical tensions and rising inflation, yet it remains a key driver of value in a challenging fiscal environment.

Despite a downward revision of the Philippines' 2026 GDP growth forecast to between 2.8 and 4.4 percent, the real estate sector has demonstrated remarkable stability. In the first quarter of 2026, the industry added approximately P26 billion in gross value, marking a 6.8 percent year-on-year increase. This performance is particularly notable as the country grapples with a regional economic slowdown affecting neighbors like Thailand, Vietnam, and Malaysia, as well as domestic challenges including political noise and a major flood-control corruption scandal.

In contrast to the growth in real estate, the Philippine construction sector faced a 0.8 percent contraction in the first quarter of 2026. Data from the Philippine Statistics Authority (PSA) reveals a sharp decline in building permits, which plummeted from a peak of over 38,000 units to roughly 14,700 by April 2026. This downturn is largely attributed to the suspension of public infrastructure disbursements during a government review of flood-control projects, rather than a broader failure of the private market.

The economic landscape shifted dramatically following a February 28 military strike by the United States on Iran, which led to the closure of the Strait of Hormuz and a subsequent spike in oil prices. This event reversed the Bangko Sentral ng Pilipinas’ (BSP) planned easing cycle, forcing interest rates upward from the initial 4.5 percent policy rate and weakening the peso. Despite these macroeconomic headwinds and the previous exit of Philippine offshore gaming operators (Pogos), real estate fundamentals remain intact as developers strategically manage new supply to address vacancy levels in the Metro Manila office market.