UMVA has learned that the Philippine property sector is bracing for a significant slowdown in the second half of the year, as the ongoing Iran war, soaring oil prices, and persistent inflation threaten to raise costs and weaken demand.
According to information obtained by UMVA, analysts warn that higher fuel and construction costs, elevated borrowing rates, and weaker consumer purchasing power will likely weigh heavily on the residential, retail, and hospitality segments through the rest of 2026.
Industry experts have confirmed to UMVA that developers have started delaying construction and marketing projects in anticipation of weaker demand, and are adopting a more cautious approach to navigate the challenging landscape.
A key concern is the impact of the war on fuel and supply chains, which could continue to pressure developers and buyers. The Middle East plays a significant role in remittances to the Philippines, accounting for around 18% of total remittances in 2025.
Prolonged conflict in the region would continue to affect oil markets, even if tensions ease, and higher oil prices would eventually filter through to transportation, utilities, and consumer expenses, squeezing household purchasing power in a country heavily dependent on imports.
Inflation risks could also spur the central bank to keep benchmark interest rates elevated, which would make it difficult for the property sector to recover. The cumulative 200-basis-point policy easing has yet to translate into substantially lower mortgage rates, which currently remain at around 7.7% to 7.8%.
The condominium segment in Metro Manila continues to face a large supply overhang, with around seven years' worth of unsold inventory. As a result, developers are increasingly shifting towards horizontal housing projects in provincial growth areas, where demand is driven more by end-users than speculative buyers.
Despite the challenges, analysts have identified some property segments that are expected to continue performing well, including logistics and industrial developments, information technology and business process management office spaces, and the high-end residential market.
Logistics and industrial developments, in particular, benefit directly from supply chain restructuring, as occupiers seek larger, strategically located warehousing near major transport nodes to guard against disruption.
A weaker peso could also improve the country's competitiveness for export-oriented industries and outsourcing firms. However, many business process outsourcing firms and global capability centers remain cautious about expansion due to economic uncertainty and rapid technological change.
Analysts recommend that developers prioritize operational efficiency, carefully phase projects, lock in material costs early, and invest in energy-efficient infrastructure and renewable energy systems to reduce operating costs for tenants.
