Philippine developers shift to provincial affordable housing as Metro Manila oversupply persists: S&P
Property developers in the Philippines are pivoting toward affordable residential projects outside Metro Manila, where supply-demand conditions are more balanced, according to S&P Global Ratings. The ratings firm noted residential oversupply eased in 2025 but ready-for-occupancy inventory remained h
Property developers are shifting toward affordable residential projects outside Metro Manila, where supply-demand conditions are more balanced, as elevated ready-for-occupancy inventory and higher interest rates continue to weigh on the capital’s housing market, according to S&P Global Ratings.
In its October report on Southeast Asian property markets, S&P Global said residential oversupply in the Philippines eased in 2025, although ready-for-occupancy inventory remained high. The decline in property sales narrowed to 7 per cent year on year in the first half of 2026 from an 11 per cent contraction in 2025.
“Developers are pivoting to affordable residential projects outside Metro Manila, where supply-demand conditions are more balanced,” S&P Global said. The ratings firm said rising interest rates and weaker purchasing power could weigh on demand for mid-range and affordable housing over the next 12 months.
S&P Global projected Philippine gross domestic product growth at 2.9 per cent in 2026 before accelerating to 5.4 per cent in 2027. It also forecast inflation at 5.5 per cent this year before easing to 3.6 per cent next year.
The ratings firm said consumer sentiment remained affected by supply-chain disruptions, oversupply in Metro Manila, weaker purchasing power, and rising interest rates. It also described funding conditions as cautious, citing restrained sentiment among domestic banks amid strains in the property industry.
S&P Global said major developers Ayala Land, Inc., Megaworld Corp., SM Prime Holdings, Inc., and Robinsons Land Corp. were also tightening capital spending and increasing their focus on investment properties. The four developers cut their aggregate 2026 capital expenditure (capex) budget by 25 per cent from their initial plans because of macroeconomic and industry uncertainties, according to the report.
The ratings firm said recurring income was expected to increase as developers expanded their investment portfolios, while stable recurring cash flow could help cushion weaker residential sales and support leverage and earnings resilience. Major developers are also using majority-owned real estate investment trust (REIT) subsidiaries to recycle capital and maintain funding flexibility. S&P Global cited Ayala Land’s regulatory approval for a P19.5-billion asset infusion into AREIT, Inc., Megaworld’s planned asset infusion that would increase MREIT, Inc.’s gross leasable area by 47 per cent in 2026, and Robinsons Land’s proposed P10.6-billion asset injection into RL Commercial REIT, Inc., which would increase the REIT’s gross leasable area by 14 per cent.
