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.
Colliers said office leasing activity also softened, while occupiers delayed expansion and investment decisions amid uncertainty over economic growth, inflation, and geopolitical risks.
The Philippine economy grew by 2.3% in the second quarter, slower than the 5.4% expansion a year earlier and 2.8% growth in the first quarter, according to Philippine Statistics Authority data.
Colliers said the second-quarter performance, excluding the pandemic period, was the weakest quarterly economic 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 rate increase for the year.
The central bank has raised the policy rate by a cumulative 75 basis points since April.
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,” Colliers Philippines Research Director Joey Roi Bondoc said.
“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, Colliers said condominium oversupply in some Metro Manila submarkets, elevated vacancy levels, and regulatory bottlenecks continued to constrain the sector’s recovery.
The firm 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.
Colliers said 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.
He said fewer project launches in Metro Manila were being offset by continued launches outside the capital region, particularly in 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, Colliers said.
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, according to the report.
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, meanwhile, remained strong in the first half, with Colliers citing semiconductor, food and beverage, fast-moving consumer goods, electric-vehicle, and fiber-cement manufacturers.
Colliers expects Central Luzon to be a major contributor to new industrial space beyond 2026 as more industrial companies locate or expand in the region. — Juliana Chloe A. Gonzales