Property markets well positioned for rebound

Property markets in the Asia Pacific (APAC) region are poised for a quick rebound once global clarity improves, according to commercial real estate services firm Cushman & Wakefield.

In a recent briefing, "The 2025 Triad: Trump’s Return, ASEAN’s Rise and the Philippine Property Path," Cushman & Wakefield highlighted the region's resilience despite elevated uncertainty from significant U.S. policy shifts during President Trump's initial 100 days in his second term. These shifts, particularly concerning U.S. trade, tariffs, and deregulation, have introduced considerable volatility across global markets.

Despite prevailing headwinds, APAC markets have demonstrated resilience, underpinned by strong domestic drivers and structural fundamentals. The Philippine property sector, for instance, shows nuanced growth across sub-sectors, supported by recent monetary easing from the Bangko Sentral ng Pilipinas, stable unemployment, and steady remittance inflows, which sustain income levels and bolster consumer confidence.

Cushman & Wakefield's research, "Trump 2.0 The First 100 Days – Implications for the APAC Economy & Property Markets," underscores that changing U.S. trade and deregulation policies have unsettled global economic confidence, prompting businesses and investors to exercise increased caution.

"Uncertainty has been the dominant theme of the first 100 days," said Dr. Dominic Brown, Head of International Research at Cushman & Wakefield. "While periods of heightened uncertainty typically dampen business and investment confidence, Asia Pacific’s strong fundamentals are helping to cushion the impact. Real estate markets in the region remain resilient but delays in decision-making by businesses and investors as they navigate the uncertainties are key risks in the near term.”

Key findings reveal that while APAC entered 2025 with strong momentum anchored by domestic demand and real estate investment, expectations for GDP growth have moderated as organizations adjust to ongoing policy volatility. The report notes risks of softer global growth and trade disruptions, especially for manufacturing sectors oriented towards U.S. exports. At the same time, Southeast Asia's industrial hubs benefit from supply chain diversification, boosting local investment and shifting industrial investment sales to the forefront over traditional office and retail assets.

“While risks are clearly elevated, historical trends suggest that Asia Pacific’s property markets are well-positioned to rebound quickly once greater global clarity emerges. It is therefore essential for occupiers and investors to stay nimble and adjust their strategies quickly so as to ride the wave of recovery once it happens,” Brown noted.

Cushman & Wakefield’s third annual Southeast Asia Outlook report identifies data center investment volumes across the region increased more than four-fold to $3.2 billion year-on-year, representing about 40% of total industrial sales volumes across the region through 2024. Singapore, Malaysia, and Indonesia continue to lead in this sector, driven by strong infrastructure, increasing cloud adoption, and regulatory support for digital expansion.

Xian Yang Wong, Head of Research, Singapore & Southeast Asia at Cushman & Wakefield and author of the report, noted, "Despite the uncertainties in the global landscape due to the evolving tariff situation, Southeast Asia’s economic fundamentals remain steady, with resilient domestic consumption and a growing middle class. The region is poised to attract continued investment inflows, particularly in high-growth sectors. Industrial and data centers will remain top priorities for institutional investors, with increasing capital allocated to logistics, life sciences, and AI-driven digital infrastructure.”

"Southeast Asia’s resilience and strategic positioning make it a prime destination for global capital, but businesses must stay agile amid macroeconomic shifts," Wong added. The report identifies that Southeast Asia’s projected GDP growth of 4.8% in 2024 outpaces last year’s 3.9%, with strong momentum in Vietnam, Malaysia, and the Philippines.

The Philippine property market exhibited sustained, albeit cautious, resilience in the first quarter of 2025. According to the Q1 2025 Office MarketBeat and Investment MarketBeat reports, the vacancy rate for Prime and Grade 'A' office space in Metro Manila rose slightly to 17.3%, influenced by the exit of Philippine Offshore Gaming Operators (POGO) and subdued demand. Despite this, demand from the expanding IT-BPM sector continues to underpin office space uptake, presenting opportunities for asset optimization targeting this resilient segment.

Tetet Castro, Director and Head of Tenant Advisory Group at Cushman & Wakefield, said, “The overall vacancy rate for Prime and Grade 'A' office spaces in Metro Manila recorded a slight increase to 17.3% in Q1 2025, primarily driven by the return of office space following the exit of POGO operators and completion of new developments. Despite this, office demand continues to be supported by the expansion and consolidation activities of IT-BPM companies. As vacancy rates remain elevated, average headline rents declined slightly in Q1 2025 to 987 Philippine pesos ($16.89) per square meter per month.”

“In the medium term, rental rates for Prime and Grade ‘A’ office spaces within the Central Business Districts (CBDs) are expected to remain stable amid elevated vacancy rates. However, the substantial influx of new supply, coupled with subdued office demand due to global economic uncertainties, may exert downward pressure on rental rates for developments outside the major CBDs.”

Claro Cordero, Director and Head of Research, Consulting & Advisory Services at Cushman & Wakefield, pointed to the ongoing appeal of the Philippine outsourcing industry as a robust driver of economic stability, along with opportunities arising from shifting global investment patterns.

Cordero noted, “The Philippine real estate market reflects nuanced sectoral trends shaped by global economic headwinds and shifting investor behavior. Residential developments, particularly in Metro Manila, are witnessing a cautious environment as foreign investors prioritize more liquid, lower-risk assets amidst persistent oversupply and elevated borrowing rates. This landscape offers local investors strategic advantages, such as reduced competition and the potential to acquire undervalued assets or negotiate more favorable terms. Notably, while the high-end residential condominium segment is expected to sustain capital value appreciation, the mid-end segment faces a slower recovery tied to oversupply and limited absorption rates. Current figures indicate approximately 450,000 mid- to high-end units in Metro Manila, with almost 15% unsold inventory equating to five to six years of supply at current demand levels. The market requires substantial inventory reduction before new project launches can be incentivized.”

“Other real estate sectors also exhibit distinctive trajectories. The retail segment, challenged by global trade friction and evolving consumer preferences, is finding opportunities in localized demand and ongoing urbanization in provincial areas. Industrial assets, particularly logistics and warehousing, are gaining favor due to robust e-commerce growth and supply chain transformation, though risks from geopolitical uncertainties and technological advancements persist. The hotel sector demonstrates encouraging momentum, driven by the revival of large-scale events and international travel, alongside sustained corporate demand,” Cordero added.

“On a global scale, real estate investment markets demonstrate evolving trends, including the shift towards sustainable developments and digitalization within asset management. Locally, these trends present both opportunities and competitive pressures. Philippine developers and investors must strategically position themselves to cater to increasing demand for energy-efficient buildings and smart infrastructure expected to rise alongside consumer spending.” Cordero adds.

“Despite these opportunities, macroeconomic risks such as rising inflation and currency fluctuations remain significant factors for Philippine real estate investors. Developers must also remain alert to disrupted supply chains, which directly affect project timelines and construction costs.” Cordero said.