Developers hold back launches as Philippine growth slows: Colliers

Developers are deferring new project launches as weaker economic growth, higher borrowing costs and geopolitical uncertainty weigh on the market, Colliers Philippines said. Residential and office take-up slowed in the first half, while the economy expanded just 2.3% in the second quarter.

Property developers are holding back new project launches as weaker economic growth, elevated borrowing costs and geopolitical uncertainty weigh on expansion decisions, according to Colliers Philippines. In its latest report, the property consultancy said residential launches and take-up slowed in the first half as developers became more cautious about adding supply.

Office leasing activity also softened, with occupiers delaying expansion and investment decisions amid uncertainty over economic growth, inflation and geopolitical risks, Colliers said. The Philippine economy grew by 2.3% in the second quarter, slower than the 5.4% expansion a year earlier and the 2.8% growth in the first quarter, according to Philippine Statistics Authority data. Excluding the pandemic period, this was the weakest quarterly expansion in more than 16 years, or since the 1.8% growth recorded in the fourth quarter of 2009.

Average gross domestic product growth in the first half stood at 2.6%, below the government’s revised 3.5%-4.5% growth target for 2026. The Bangko Sentral ng Pilipinas (BSP) raised its target reverse repurchase rate by 25 basis points to 5% in August, its third consecutive increase for the year, bringing cumulative hikes since April to 75 basis points. Headline inflation eased to 6.1% in August from 6.2% in July but remained above the BSP’s 3% target and its 2%-4% tolerance band.

“The Philippine property market was off to good start in 2026 until the Middle East conflict erupted,” said Joey Roi Bondoc, research director at Colliers Philippines. “This exposed vulnerabilities in global supply chain systems, resulting in higher fuel prices and subsequently increasing the cost of construction materials in the Philippines,” he added.

In the residential market, condominium oversupply in some Metro Manila submarkets, elevated vacancy levels and regulatory bottlenecks continued to constrain the sector’s recovery, Colliers said. Demand remained strongest in the economic and affordable segments, particularly units priced between P1.8 million and P3.6 million, which accounted for about two-thirds of Metro Manila condominium take-up in the first half. New supply in Metro Manila remained limited because of a still-sizable number of unsold units, particularly in the Bay Area and areas surrounding Makati.

“In our view, tempered office and residential launches are a much needed and strategic pause,” Mr. Bondoc said. Fewer project launches in Metro Manila were being offset by continued launches outside the capital region, particularly horizontal developments in Luzon, the Visayas and Mindanao.

In the office market, Metro Manila transactions fell 24% quarter on quarter in the second quarter as occupiers deferred leasing decisions. Traditional firms continued to drive office demand, followed by third-party outsourcing companies and global capability centers, while flexible workspace net take-up doubled year on year. Outside Metro Manila, office transactions posted their weakest first-half performance since 2022, with Iloilo ahead of Cebu, where Colliers cited limited inventory in information technology and business parks.

Industrial property demand remained strong in the first half, with Colliers citing semiconductor, food and beverage, fast-moving consumer goods, electric-vehicle and fiber-cement manufacturers. The firm expects Central Luzon to be a major contributor to new industrial space beyond 2026 as more industrial companies locate or expand in the region.