Office space sector drives real estate growth in first half 

The Philippine real estate sector showed resilience and continued to post steady growth in the first half of 2025, led by the office sector which continues to benefit from the expansion of the business process outsourcing sector, according to a report by Manila Bulletin.

In a media briefing, Rick Santos, chairman and CEO of global real estate services company Santos Knight Frank said the office sector’s occupancy levels are rising as more BPO firms choose to expand within Metro Manila, reaffirming its position as a top outsourcing destination.

“The current geopolitical climate is marked by rapid and unpredictable changes, creating uncertainty for investors, businesses, and consumers alike.

“Despite this, the Philippine real estate sector continues to demonstrate remarkable resilience, anchored by strong market fundamentals, proactive government policies and growing domestic demand,” he noted.

Santos added that, “We continue to see steady demand in the office market from BPO and traditional occupiers. The industrial sector is expanding steadily, driven by growth in manufacturing, logistics, and storage.”

In the residential market, he said Metro Manila continues to position itself as an affordable luxury market, while the hospitality sector is regaining strength with an expanding hotel pipeline across key destinations.

“As economic tides shift, real estate reaffirms its place as the gold standard of investment - offering long-term value, enduring stability, and tangible growth opportunities, Santos said.

Net absorption in the first half of 2025 records at 192,000 sq.m., largely driven by move-ins and expansions from the BPO industry. Metro Manila office market’s supply totals to 8.8 million with the introduction of 158,000 sq.m. new office stock.

More than 403,000 sq.m. office stock is expected to be completed in the latter part of the year, with an additional of more than half a million square meters over the next five years.

More BPO companies continue to choose Metro Manila as their preferred office destination with the launch of more Grade A and Prime buildings especially in BGC, Taguig and Makati.

Taguig now commands the lowest vacancy rate of 15 percent and the highest average asking rate at P1,248 per sqm per month, 21 percent higher than the overall average of P1,024 per sqm per month. Makati follows at 17 percent vacancy and P1,220 per sqm per month asking rate.

Metro Manila continues to retain its position in the super prime market, placing ninth in Knight Frank’s Prime Global Cities Index in the first quarter of 2025, with a 5.5 per year-on-year (y-o-y) increase in prices.

On a global landscape, this puts Manila in an affordable luxury market, providing more value for its consumers comparing to other APAC markets.

Meanwhile, prime villages in Metro Manila continue to demonstrate steady growth in the first half 2025, sustaining their upward trajectory. Limited availability and exclusivity continue to drive the demand in these exclusive subdivisions.

Forbes Parks leads with a 15 percent increase, now at P825,000 per sqm, closely followed by Dasmarinas, Magallanes and Ayala Alabang at 14 percent. Urdaneta and San Lorenzo are at 12 percent, while Bel-Air closes the list at 11 percent.

CALABARZON and Central Luzon solidify their status as key industrial hotspots, attracting strong interest from foreign enterprises seeking operational efficiency and access to critical infrastructure.

Average rents in these areas range from P230 to P290 per sqm a month – offering competitive rates for companies in manufacturing, pharmaceuticals, and cold storage – sectors that are driving sustained demand for industrial space.

On the other hand, tourist arrivals hit 2.9 million in the first half of 2025 supported by proposed government initiatives such as tourism tax refund and visa-free entries.

Rising international demand has pushed for 5-star hotel rates in Metro Manila up by 11 percent, led by high-spending visitors from US, Japan, Canada, and Australia. Taguig tops the chart with an average nightly rate of P14,991, closely followed by Pasay-Bay Area at P13,601.

Moreover, iconic hotels Sofitel and InterContinental are making a comeback in new strategic locations such as Cebu and New Clark City respectively, reflecting a renewed confidence in the tourism sector and a shift in hospitality strategy.

Major hotel operators are partnering with local developers to establish more high-end hotels attracting higher-spending tourists, increasing average length of stay and tourist spending to help boost tourism revenue.

From Accor’s partnership with Megaworld for Mercure; to Marriott International and CG Hospitality for the rebranding of The Farm at San Benito, Autograph Collection; to Banyan Tree and Hann Resort in New Clark City, slated to launch by second half this year.