PROPERTY demand could weaken amid the ongoing war in the Middle East given the likely hit on household consumption, a Colliers Philippines analyst said.
Joey Roi Bondoc, research director of Colliers, told The Manila Times that higher oil prices and disruptions caused by the war were likely to reduce overseas Filipino worker (OFW) remittances, a key driver of residential and retail spending in the country.
“Higher oil prices and concerns about what’s happening in the Middle East are likely to have negative impacts on OFW remittances... [and] stifle retail and residential demand,” Bondoc said.
The Middle East is host to many OFWs whose families depend on the money being sent back home. Many have also opted to return to the Philippines given the danger of being caught up in the conflict.
Bondoc noted that prior to the war, property segments such as residential, office and retail were “pretty stable,” but emerging risks could weigh on market performance in the coming months.
The retail sector, which has shown strength earlier, could also face headwinds from slower remittances and rising inflation.
At the same time, elevated mortgage rates continue to challenge residential demand, further compounding pressures on the sector.
On the supply side, Bondoc said a weaker peso was expected to increase construction costs due to higher logistics expenses and pricier imported materials.
“Higher logistics costs [are] likely to raise construction materials and eventually price of developing residential units,” he said, adding that developers could temper project launches, particularly in Metro Manila.
He noted that developers had already begun slowing condominium launches in 2024 amid an oversupply of around 30,000 ready-for-occupancy units.
Despite these challenges, the industrial segment is expected to remain relatively resilient, with new industrial parks slated for completion in Central Luzon between 2026 and 2028.
However, rising oil prices are also increasing logistics costs, which could shift demand toward warehouses located near ports, major roads and residential areas.
Bondoc said developers would need to carefully manage their supply pipeline amid ongoing volatility.
“Developers need to be mindful of their launches and supply pipeline... given volatilities in the market,” he said, adding that the ongoing Middle East war could prompt firms to reassess new developments in the near to medium term.