The cyclical nature of the property sector

Over the last few weeks, discussions surrounding Metro Manila’s condominium sector have taken on a more cautious tone.

Concerns over a reported oversupply and extended absorption periods—owing to elevated interest rates and the exit of Philippine offshore gaming operators, among other factors—have prompted questions on the real state and health of this industry.

A necessary recalibration

Another perspective, however, explains the current situation as a “necessary recalibration”—one that steers the market away from speculation and toward long term sustainability.

After years of rapid expansion especially before the pandemic, this shift now offers an opportunity to reshape Metro Manila’s condominium landscape into one that is more resilient, more demand-driven, and more aligned with real end-user needs.

“Metro Manila’s condo oversupply signals a maturing and stabilizing real estate market. Increased competition is driving developers to prioritize quality, innovation, and differentiation. Rather than a setback, this oversupply acts as a natural filter, eliminating weaker projects and raising industry standards,” said Prof. Enrique M. Soriano III, executive director of W+B Advisory Group.

The current landscape, in fact, presents a number of silver linings: developers are enhancing their offerings, buyers are getting better and more attuned options, and investors are finding new opportunities in a market that is moving toward a more balanced environment.

In a real estate cycle, downturns are not roadblocks but are “resets”. And those who understand the nuances of this transition will be best positioned to thrive in the market’s next phase.

Emerging districts like Bridgetowne are expected to see sustained demand in premium residential space.

Long term value

Amid this scenario, developers are now “moving away from speculative projects and toward sustainable, mixed-use, and community-driven developments that emphasize long term value,” Soriano said.

At the same time, high-net-worth individuals, affluent empty nesters, and discerning buyers are also increasingly favoring well-located, low density, and amenity-rich developments.

This highlights the continued demand for premium properties in key business districts like Makati CBD, Bonifacio Global City (BGC), Ortigas Center and Cebu City, as well as emerging districts like Bridgetowne and Parklinks—while reinforcing the notion that prime-location investments remain among the safest bets.

Janlo delos Reyes, head of Research and Strategic Consulting at JLL Philippines, concurs, pointing out that such markets—Makati CBD and BGC—are well ahead in terms of market maturity.

“These two districts have continued to register solid take-up and stable price growth despite current market conditions,” he said, adding that other areas in the metro, which recorded periods of significant growth in the past, may still be considered as maturing.

“Nonetheless, we can expect the situation to stabilize over the long run,” delos Reyes added.

No signs of panic, just patience

Sheila Lobien, CEO of Lobien Realty Group Inc., meanwhile assured that they haven’t observed prevalent “speculative behavior” in the market.

“We sense no widespread panic among developers and those who have condo mortgages. There is no flood of second-hand condos for sale, increase in real estate non-performing loans (NPLs) or surge in repossessed condo inventory for sale in the market,” she explained.

The situation is thus unlike overheated markets, where investors offload properties en masse at the first sign of trouble.

Lobien even waxed optimistic in saying that demand is expected to “recover once benchmark rates are possibly down to 5 percent, which is expected this year or early next year. Recovery in demand is just a matter of time.”

Major CBDs are seen to continue thriving.

From oversupply to opportunity

Similarly, another expert stressed that the perception of an oversupply overlooks a crucial point: that the Philippine real estate market is no longer driven purely by speculative investments but by strategic, end-user-oriented growth.

Andoy Beltran, VP and head of Business Development at First Metro Securities Brokerage Corp., said this is a sign of a more disciplined market.

Beltran explained that in a maturing market, sustainable price growth and rental yield stability take precedence over rapid boom-and-bust cycles.

“A maturing market is characterized by developers responding more strategically to demand rather than building just for the sake of launching. The current supply situation indicates a shift from speculative development to data-driven, end-user-focused projects. This means inventory is better aligned with real demand, reducing the risk of oversupply-driven price crashes,” he said.

Instead of viewing the present inventory levels as problematic, seasoned investors and developers should recognize this as a cycle in which strategic positioning and patience will ultimately yield long term gains.

“The key is recognizing the transition points—when stabilization turns into the next growth phase,” Beltran added.

Source: Inquirer

Tax and market reforms are transforming the economy

Over the past decade, the Philippine government has implemented pivotal tax and market reforms to drive economic growth, ensure fiscal sustainability, and enhance business competitiveness. Landmark legislation — including the Tax Reform for Acceleration and Inclusion (Train) Act, Corporate Recovery and Tax Incentives for Enterprises (Create) Act, Ease of Paying Taxes Act (Eopta) — all played a transformative role in modernizing the country's tax system and strengthening its financial markets.

Enacted in 2017 and implemented in 2018, the Train Act (Republic Act [RA] 10963) was the first package under the Comprehensive Tax Reform Program. The groundbreaking reform aimed to simplify taxation, promote equity, and generate revenues to fund infrastructure and social programs.

It led to higher disposable income for low- and middle-income earners by reducing personal income tax rates and exempting individuals earning P250,000 or less annually. Adjusted tax brackets lowered the burden on middle-income earners, resulting in higher take-home pay, increased consumer spending, and economic growth.

It also increased government revenue for development programs.

To offset lower income tax collections, Train imposed higher excise taxes on fuel, automobiles, sugary beverages, and cigarettes. The additional revenue funded major government initiatives such as the Build Build Build program, free college tuition, and universal health care.

Greater consumer spending and improved government infrastructure investments contributed to business expansion, enhancing logistics, connectivity, and overall economic activity. The introduction of a flat 6-percent tax rate on estate and donor's taxes, meanwhile, replaced the complex tiered system, making wealth transfers more efficient and equitable.

While Train improved revenues, however, higher excise taxes contributed to inflation, particularly in fuel and food prices. The government mitigated this through safety nets like the unconditional cash transfer program.

The law played a transformative role by balancing tax relief for low- and middle-income earners with enhanced government revenue. While inflationary concerns arose, the long-term benefits of fiscal sustainability, economic growth, and investment confidence positioned the country for further development.

To counteract the economic downturn from the Covid-19 pandemic, meanwhile, the Create Act (RA 11534) was enacted in 2021. The law provided tax relief to businesses while modernizing investment incentives.

Among others, it reduced the corporate income tax for large corporations to 25 percent from 30 percent, while that for micro, small, and medium enterprises with net taxable income of P5 million or less and total assets below P100 million was lowered to 20 percent.

Fiscal incentives were rationalized and modernized to be performance-based, time-bound, and targeted incentives. Also included in the law is an income tax holiday of four to seven years, a five-percent special corporate income tax for export enterprises, enhanced deductions for domestic and export enterprises and sunset provisions for existing incentives.

VAT exemptions and incentives, meanwhile, cover sales of medicines for cancer, diabetes, and kidney disease and a VAT zero-rating for exporters to maintain global competitiveness.

The minimum corporate income tax was reduced to 1 percent from 2 percent until July 1, 2023, easing the burden on struggling businesses, while the percentage tax for non-VAT registered businesses was lowered 1 percent from 3 percent, effective until July 1, 2023. Incentives were also provided for investments in less-developed regions and priority industries.

Create lowered corporate tax rates, bolstered business recovery, and improved the Philippines' attractiveness to investors. The restructured tax incentives encouraged strategic investments, fostering economic revival and job creation.

The Eopta Act (RA 11976), signed into law in 2024, modernized tax compliance by reducing administrative burdens and aligning tax processes with global best practices. Among others, taxpayers were categorized into small, medium, and large, streamlining compliance processes, and tax filing and payment were simplified via fewer forms, improved e-filing/e-payment systems and nationwide payment options.

It also streamlined the VAT system, ensuring refunds within 90 days, and VAT-exempt transactions were made clearer to reduce compliance complexities. Greater use of technology in tax processes was also mandated, reducing errors and improving efficiency.

The Eopta has made tax compliance more accessible, particularly for small and medium enterprises. By integrating digital solutions, it enhances efficiency, transparency, and global competitiveness.

Meanwhile, the anticipated Capital Markets Efficiency Promotion Act (Cmepa) seeks to modernize Philippine capital markets by reducing tax barriers, encouraging investment, and enhancing market liquidity.

Among others, it aims to lower the stock transaction tax to 0.1 percent from 0.6 percent in line with regional markets. The documentary stamp tax for original issuances will also be lowered to 0.75 percent from 1 percent and unit investment trust funds and mutual funds will be exempted from the tax, making them more attractive. The tax treatment of long-term deposits and investments will also be standardized, broadening the tax base.

Approval of the Cmepa law is expected to enhance market liquidity, encourage investment, and strengthen the Philippines' competitiveness in global financial markets. The coming years will reveal its effectiveness in expanding investor participation and deepening capital markets.

Train, Create, Eopta and Cmepa demonstrate the government's commitment to tax modernization, investment promotion, and ease of doing business. While each law addresses distinct aspects of economic development, together they create a comprehensive strategy for long-term growth.

As these reforms continue to evolve, businesses, investors, and taxpayers must stay informed and capitalize on emerging opportunities. Ultimately, these policy changes aim to build a more competitive, inclusive, and resilient Philippine economy that can navigate global challenges and sustain prosperity.

Source: Business World

PH ranks 2nd in branded residences market share

The Philippines ranks second only to Thailand among Asia's branded residences market, according to hospitality consulting group C9 Hotelwork's latest report.

Despite a sluggish pace in international tourism, the Philippines' supply value of global luxury residence brands totaled $4.6 billion in December 2024, driven by economic growth in Metro Manila, Cebu, Boracay, Davao, Palawan and Bohol.

Published on Monday, the report showed Thailand having the highest market share at 23.3 percent, the Philippines at 17.3 percent, and South Korea at 11.6 percent.

The total supply value in the region was $26.6 billion across 68,001 units.Malaysia, Vietnam and India collectively accounted for 24.5 percent of total market share.

Market value

In terms of market value, the Philippines was likewise in second at $4.6 billion — attributed to growing urban and leisure destinations, led by Metro Manila with 18 properties and 6,246 units.

The branded residences market has traditionally served the domestic and overseas Filipino workers (OFW) segments, but this has changed with elite, non-traditional hospitality brands establishing their presence for the first time.

C9 Hotelworks Managing Director Bill Barnett said the influx of new global branded residences makes the Philippine real estate market more appealing to overseas buyers.

"Given the current domestic slump, more diversity is needed versus relying purely on the domestic and OFW markets," Barnett pointed out, citing Thailand's success with ultra-luxury projects.

Branded real estate in Thailand has usually been led by resort markets. But brands such as Porsche Design Tower Bangkok entered in 2024, commanding prices of $30,000 per square meter (sqm) and injecting new energy into the urban market. "Bangkok, like Miami and Dubai, is a playground city for wealthy collectors of unique real estate products.

There is no reason why Manila could not also become a global playground city, given its regional access, entertainment, sports, gaming and lifestyle," Barnett said. The Ascott Limited, meanwhile, expressed optimism on the sector's future, highlighting the strength of its brands over time.

"We are fully committed to the Philippines in the long term and believe the strengths of our brands — led by Somerset, Citadines and Oakwood — will add confidence and services required by buyers of internationally branded residences," Ascott Limited vice president for business development Saowarin Chanprakaisi said.

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Source: Manila Times