Philippine property slump seen extending into 2027
MANILA, Philippines — The Philippine residential property market is unlikely to regain significant momentum before late 2027 as excess condominium supply, rising costs, and expensive borrowing continue to constrain homebuyer demand.
S&P Global Ratings Corporate Ratings Analyst Johann Tan said the property sector faces a weak near-term outlook, with developers struggling to generate stronger residential sales amid persistent economic pressures.
The subdued market is reflected in the performance of four major Philippine property developers such as Ayala Land Inc., SM Prime Holdings Inc., Robinsons Land Corp., and Megaworld Corp., whose combined residential pre-sales fell by 7% in the first half of 2026.
Tan said the sector's recovery would depend partly on easing macroeconomic pressures, which have affected buyers' capacity to purchase homes and slowed the absorption of available residential units.
The volume of unsold properties remains a key concern, limiting developers' ability to sustain sales growth and prompting them to take a more cautious approach to new investments.
“They will take some time to go away, and overall, it remains quite a weak outlook with meaningful improvement in the residential segment, only expected in the late part of 2027, where hopefully these macro headwinds die down,” said Tan.
Developers are expected to remain focused on core and affordable housing, which continues to account for a substantial portion of their sales and pre-sales.
However, demand in this segment remains exposed to inflation and shifts in consumer confidence, leaving the market vulnerable to prolonged economic uncertainty.
Property firms are also becoming more selective in allocating capital, with greater emphasis on projects that can generate sustainable returns. Developments outside Metro Manila remain potential growth areas where local supply and demand conditions are more favorable, while luxury projects continue to form part of developers' plans for a narrower pool of buyers.
The challenges facing the Philippines mirror broader pressures across Southeast Asia, where higher construction expenses and financing costs are forcing property developers to reassess project viability and pricing strategies.
Fiona Chen, associate director for Southeast Asia corporate and infrastructure ratings at S&P Global Ratings, said developers across the region are adjusting their plans to reflect buyers' growing sensitivity to prices and their capacity to afford housing.
Companies are also seeking to strengthen their financial positions by managing capital expenditures, diversifying funding sources, and expanding recurring-income businesses to help cushion risks associated with weaker property demand and debt refinancing.
For the Philippine residential sector, a sustained rebound remains a longer-term prospect. With unsold inventory and economic headwinds continuing to weigh on sales, developers may have to navigate a prolonged period of subdued demand before market conditions improve significantly. (Contributed story)
- Latest
