The Philippine real estate sector’s commercial and residential markets registered significant growth in the first half of 2024, with the office sector taking the spotlight after office demand exceeded the net absorption recorded in the entire 2023, according to global real estate services company Santos Knight Frank. 

Rick Santos, Chairman & CEO of Santos Knight Frank says: “While the past years have been challenging for real estate, particularly the commercial sector, 2024 is set to be a turning point with significant upticks and tailwinds across all asset classes. 

“Return-to-office mandates and office expansions, supported by offshoring operations, have led to a doubling of demand in the office market, surpassing 2023’s take-up in Metro Manila. We expect this to continue as the Philippines remains to be one of the most competitive offshoring hubs in Asia-Pacific driven by a young talent pool, affordable operating costs, and a robust supply of office spaces.” 

He continues: “In the luxury residential sector, Manila has maintained its lead at Knight Frank’s Prime Global Cities Index with 26% year-on-year growth in Q1, driven by new launches that are pushing Metro Manila's maximum price tag close to PHP 1 million per square meter. This surge is attributed to the limited supply of ultra-luxury options in the Philippines. We anticipate increased activity and more projects in this sector in the coming years.” 

"In general, we are optimistic that the market is almost close to pre-pandemic levels. The robust demand across commercial and residential sectors indicates a promising outlook for Philippine real estate," Santos adds.  

Office vacancies improved in 1H 

As companies commit to long-term workplace strategies, tenants are expanding workspaces, starting fit-outs, and leasing in the busy CBDs of Makati and Taguig. This trend is reflected in Taguig's leading position as Metro Manila's preferred office choice, with a vacancy rate of 14.5%, lower than Metro Manila’s average vacancy rate of 18.9%. 

Meanwhile, Makati continues to command the highest average asking rent at PHP 1,256/sqm/mo, 22.9% higher than the overall average of PHP 1,022/sqm/month. Taguig follows closely at PHP 1,250/sqm/month. 

127K sqm of office stock were delivered in 1H 2024, while over 299K sqm of office stock is anticipated later in the year, with an additional 360K sqm projected through 2027.  

Manila set to enter super prime market 

New residential developments are pushing the boundaries of luxury living in Metro Manila, setting the stage for the metropolis to join the super prime market. Knight Frank defines super prime as the highest tier of luxury properties, with projects commanding at least USD 10M per unit. 

The grand launches of exclusive properties like Park Villas in Makati City and Banyan Tree Residences Manila Bay in Pasay City, with price tags nearing PHP 1M/sqm, have cemented Manila's top spot in Knight Frank's Prime Global Cities Index for Q1 2024 as the fastest-growing luxury residential markets. 

Meanwhile, strong demand and limited availability in Manila's prime villages continue to drive capital appreciation. Forbes Park and Ayala Alabang lead with a 13% increase, rising from PHP 580,000/sqm and PHP 250,000/sqm, respectively, in 2023. Dasmariñas Village and Magallanes Village also saw significant growth, each with a 12% increase. 

More mall redevelopments to come 

Five Metro Manila malls with varying levels of redevelopment works commenced within the first half of 2024, with a growing focus on more efficient use of resources.  

Ongoing redevelopment projects include the transformation of Robinsons Forum and Greenbelt 1. In addition, Trinoma, Glorietta, and Greenbelt 2 are amid renovations and improvements, while plans are underway for Shangri-La Plaza, Market! Market!, SM Megamall, and other yet-to-be-confirmed SM malls.  

Despite the significant changes, new Metro Manila malls are quickly filling vacant spaces with expanding brands and experience-driven offerings, reinforcing their role as essential experiential hubs amid the rise of online shopping. 

Logistics and emerging subsectors to push for sustained industrial growth 

With limited industrial estates within Metro Manila, industrial activity still tend to concentrate in the adjacent provinces in the south, but there is also notable activity going on in Clark. 

Logistics continue to be the main driver of growth as both distribution requirements of manufacturers and retailers expand, as well as the operations of logistics service providers.  

Expansion of industrial capabilities in growing and emerging subsectors such as the manufacture of semiconductors, pharmaceuticals, and electronic vehicles, are also seen as growth areas. 

Revenge tourism fuels hospitality boom  

2024 is set to be a major year for hotel openings. Five new hotels partially opened within the first half of the year that will add over 2,900 rooms upon full operations. 

Launched within the 1^st half are Citadines Roces, Ibis Styles Manila Araneta City, Solaire Resort North, Lansons Place Mall of Asia, and Grand Westside Hotel.  

Somerset Valero Makati, Seda One Ayala, and Ascott DD Meridian Park, which will add almost 900 rooms, are set to launch in the second half of the year. 

Hospitality markets outside NCR, particularly Cebu, Davao, Palawan, Subic, Baguio, and Cagayan de Oro, are also seeing a surge in new hotel projects driven by the boom in tourism. With the Philippine hospitality industry poised for significant growth in the year's second half, several high-profile hotel openings are catering to the surge in domestic and international travelers.

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