THE PHILIPPINE office market is seen to recover next year, but the residential market in the capital region will still see tempered development launches amid the full exit of Philippine offshore gaming operators (POGOs), according to property consultancy firm Colliers Philippines.

“While we saw sustained recovery for retail, hotel, and industrial segments, we continue to see setbacks for office and residential. Unabsorbed office and residential stock still linger, and developers should be more cautious of their new launches moving forward,” Joey Roi Bondoc, associate director at Colliers, said in its 2025 Philippine Property Market Outlook Report.

“2025 is a year where we will likely see the full impacts of policy changes implemented in 2024,” Colliers said.

For next year, the office market is expected to recover in terms of net take-up, following sluggish net demand in 2024, Colliers said.

Traditional and outsourcing firms are expected to be the main drivers of office space demand.

Colliers expects a 22% vacancy rate in the office sector, with a net take-up of 150,000 square meters (sq.m.) and a supply of 571,600 sq.m.

“We see record-high vacancy with the POGO exodus, but not all CBDs (central business districts) are the same, with Makati CBD, Fort Bonifacio, and Ortigas CBD faring better,” it said.

Office space demand is likely to be sustained in Pampanga, Cebu, Davao, Bacolod, Iloilo, and Davao, it also said.

Colliers also noted that occupants, including government agencies, prefer high-quality office spaces offered at a discounted price.

It cited higher take-up for green and sustainable office spaces across the country. There are around 722,000 square meters of green-certified space from 2025 to 2027, according to Colliers data.

For 2025, Colliers expects “tempered” condominium launches in Metro Manila, noting that unsold inventory has reached 75,300 units as of the third quarter of this year.

“It will take about 5.8 years to fully sell out all these unsold condominium units, about five times longer compared to the pre-pandemic period,” it said.

The POGO exodus will significantly impact the residential leasing market, especially in the Bay Area and in Makati, according to Colliers.

Property developers are also seen shifting into suburban areas with lots-only and house-and-lot projects outside of Metro Manila.

Focus on leisure property will also continue, while the demand for golf communities within and outside Metro Manila will also rise.

In the retail sector, major developers have been redeveloping their existing retail spaces.

The property consultancy firm also expects the “aggressive entry of foreign retailers in physical malls.”

Colliers also noted the focus on “experiential retail and special products and services.”

Trends seen in the retail sector include more immersive experiences, as well as more family entertainment centers, food halls, cinemas, and pop-up stores.

Lastly, the eventual take-up of ready-for-occupancy units in Metro Manila would also help support foreign retailers expanding in the home furnishing segment.

The property firm also sees the potential for foreign brands to expand in the Philippines’ hospitality sector, following the expected rise of tourists.

“Colliers believes that now is an opportune time for foreign brands to expand their presence in the Philippines given the planned modernization of the country’s international airports and the projected rise in international arrivals.”

The government’s push to become a regional manufacturing hub also bodes well for the industrial sector. The cold chain sector is also seen enjoying sustained demand for industrial and warehouse assets, it said.

“Colliers sees semiconductors, food and beverage manufacturers, as well as sunshine industries including electric vehicles, likely propelling industrial space absorption across the country.”

Moving forward, property developers are expected to reassess their strategies, identify growth opportunities, and know how to recalibrate, Colliers said. — Beatriz Marie D. Cruz