Crisis, recovery, growth: The Philippine real estate story

The pandemic has affected all markets globally in different ways and levels.

The Philippine real estate sector has long proven its resilience, consistently recovering and rising amid challenges like the global pandemic, geopolitical tensions, financial downturns, and natural calamities.

Today, it remains a key contributor to the economy. In a 2025 report, the Bangko Sentral ng Pilipinas (BSP) noted that rapid urbanization and structural transformation have driven the growth of the property sector, which now account for 5.6 percent of nominal gross output.

Listed below are key historical periods that were especially challenging for the country, but later emerged as important turning points and learning curves for the Philippine real estate industry.

In 1997, the Philippines faced economic collapse amid the Asian financial crisis. (wallstreetmojo.com)

Asian financial crisis (1997) and Global financial crisis (2008)

In 1997, the Philippines faced economic strain as the Asian financial crisis spread across the region and other growing markets. This affected the country’s property sector, which saw one of the steepest price drops in Asia, at about 18 to 20 percent.

Industry experts like Colliers Philippines observed that real estate prices had become inflated by speculative demand, while developers had overleveraged to fund projects. When the correction came, the market slowed and left projects unfinished. Despite this, office supply remained high, rising by 22 percent from 1997 to 1998.

The crisis exposed the local real estate industry to different levels of financial, political, and global risk. From the difficult period of 1997 to 2002, the development community learned the need to control office supply.

The industry began to stabilize in 2003, supported by reforms that relaxed land ownership rules. Republic Act No. 9225, or the Dual Citizenship Act, allowed foreign citizens to acquire dual citizenship and purchase real estate properties in the Philippines.

Recovery was further supported by the rise of the business process outsourcing industry, which boosted demand for office space and expanded demand beyond traditional companies to information technology, call centers, and other technology-related services.

In 2008, however, the global financial crisis weakened the economy and reduced real estate demand. The stock market fell sharply, with the PSEi losing 48.3 percent and the S&P 500 dropping by more than 50 percent from peak to trough. The real estate market declined more slowly, with office rents falling by 15 percent as BPO expansions froze.

Still, the Philippine property sector remained relatively resilient, supported by conservative banking regulations and strong remittances from overseas Filipino workers (OFWs).

These two crises also pushed the BSP to strengthen oversight of banks’ real estate exposure, including stress testing in the real estate market.

The boom in e-commerce during the pandemic has driven the demand for warehousing, logistics and supply chain solutions.

COVID-19 pandemic

The pandemic affected global markets in varying ways.

In the Philippine real estate sector, it halted a decade of growth as lockdowns weakened the economy, raised unemployment, dampened business and consumer confidence, and slowed remittance inflows.

The health crisis affected all major segments–residential, office, retail, hospitality, and industrial. From 2020 to 2022, travel restrictions and work-from-home arrangements reshaped lifestyles and demand patterns tied to the property sector.

In the midst of the Asian and global financial crises, the Philippine property sector remained relatively resilient, thanks to conservative banking regulations and strong remittances from overseas Filipino workers.

Today, the sector continues to recover and evolve. As of 2025, industry experts noted that the worst effects of the pandemic may be over, with developers now exploring new opportunities.

A July 2025 Philippine property research report by First Metro Securities analysts Mark Angeles, Estella Dhel Villamiel, and Nicole Aquino, distributed by DBS, said retail assets have emerged as bright spots in the market.

“Despite this challenging backdrop, we believe the worst may be behind us, as key sector indicators are beginning to stabilize,” the report stated. It also noted that developers have adjusted their playbook to navigate the challenging environment.

For residential developers, new launches have become more selective, with greater focus on premium segments and regional markets where demand remains resilient and inventory is healthier. Office offerings have also become more quality-focused.

Meanwhile, the pandemic-driven e-commerce boom continues to support demand for warehousing, logistics, and supply chain solutions.

In the case of the sustained closure of the Strait of Hormuz, the direct pressure is placed on fuel and construction input costs including diesel, steel, transport, bitumen, and logistics.

Geopolitical tensions

Recent global events, including the uneven reopening of key ports and volatile oil prices worsened by the Russia-Ukraine conflict and Middle East-US tensions, are expected to strain the industry’s growth.

A sustained closure of the Strait of Hormuz would also put pressure on construction and fuel input costs, including diesel, steel, transport, bitumen, and logistics.

Experts noted that the Philippines imports over 70 percent of its primary energy needs. If oil prices remain elevated, inflation could rise and limit the BSP’s room to cut rates, delaying financing relief for the residential market.

Governments around the world are working to address the compounding effects of the pandemic and recent geopolitical tensions. Challenges remain, but if there is one thing the Philippine real estate market has proven, it is the industry’s strength and resilience, including its ability to recalibrate strategies and adapt to an ever-evolving landscape.

Source: Inquirer Archives, bsp.gov.ph, colliers.com, cushmanwakefield.com