8 Things You Must Know from Colliers Quarterly Market Report Q2 2025 – Manila Real Estate Edition

July 7, 2025

The second quarter of 2025 has brought with it a wave of insights, challenges, and opportunities that are reshaping the landscape of Manila real estate. Colliers' latest quarterly market report dives deep into the trends influencing investor sentiment, development activity, and sector-specific performance across Metro Manila. As interest rates decline and global real estate sentiment stabilizes, the Manila property market stands at a critical crossroads—one defined by cautious optimism, shifting demand patterns, and the growing importance of sustainability and mixed-use innovation. Whether you're a developer planning your next move, an investor seeking reliable yields, or a homeowner navigating a crowded landscape of listings, this guide unpacks the eight most essential takeaways from Colliers' Q2 2025 findings.

1. Market Mood Shift: Gone from Cautious to Constructive

Colliers' Q2 2025 global report highlights a decisive turnaround in investor sentiment. Falling finance costs and key high-profile transactions have ushered in a "cautious optimism" mode across Asia—a trend reflected in Manila real estate. After several quarters of subdued activity, stakeholders are now finding renewed confidence in Metro Manila's property sectors, buoyed by global and regional movements. While investors previously adopted a wait-and-see approach, there's now increased inquiry from foreign and institutional buyers. This renewed interest is not just theoretical—it's translating into commitments, especially in sectors aligned with long-term demographic and infrastructure trends.

2. Interest Rate Tailwinds Backing Real Estate

The Bangko Sentral ng Pilipinas (BSP) reduced its reverse repurchase rate to 5.5% in April 2025, marking a fourth consecutive rate cut since mid-2024. Globally, monetary authorities are also loosening policy. This easing makes mortgages and development loans more accessible, breathing life into stalled projects and supporting increased market participation in Manila's residential and commercial property segments. The reduction in financing costs is expected to not only stimulate home purchases but also revive delayed launches and incentivize refinancing, offering relief to cash-strapped developers and buyers alike.

3. Office & Industrial: Bounce with Caveats

While Grade-A office markets in the region are showing signs of stabilization, Metro Manila continues to wrestle with high vacancy rates—22% in offices and over 24% in residential spaces. Despite these headwinds, strategic repositioning, flexible workspaces, and the flight-to-quality trend are pushing forward selective leasing activity, especially in core business hubs like Makati and BGC. Companies are now prioritizing well-located, eco-certified, and amenity-rich buildings as hybrid workforces demand both efficiency and employee wellness. Meanwhile, industrial properties are seeing increased attention in fringe cities, particularly where last-mile logistics are essential.

4. Residential Reality: Oversupply, Sluggish Uptake

Residential development remains active but faces a mixed reception. Manila saw a 5% increase in condominium inventory in 2024, totaling approximately 162,510 units. Over 7,800 units were completed in the first half of 2025 alone. However, Colliers warns that residential vacancy could climb to 26% by year-end, mainly due to continued oversupply and softened demand in the mid-income segment. Buyers are becoming more discerning, focusing on developments with strong property management, access to transit, and better amenities. Developers must now rethink unit sizing, pricing strategies, and pre-selling timelines to stay competitive.

5. Rents & Returns: Flattening Trend

Residential rental rates declined slightly by 0.4% in Q1 2025. Gross rental yields across Metro Manila remain around 5.1%, competitive for Southeast Asia. Yet, net yields are being squeezed by rising operational costs, taxation, and vacancy risks. Investors are advised to look beyond headline figures and carefully assess after-tax returns. Successful lessors are adapting by offering incentives, flexible lease terms, and targeting niche tenant bases such as digital nomads or foreign retirees. Meanwhile, short-term rentals, though regulated, remain lucrative in key business and tourist districts when well-managed.

6. Pipeline Dynamics: More Coming, Fewer Over Time

Although Q1 2025 recorded zero new condo completions, over 8,600 units are expected to be delivered by the end of the year, with the Bay Area leading in new supply. Looking ahead, Colliers projects that annual completions will average 5,800 units from 2025 to 2027—a significant reduction from the 13,000-unit annual average during the POGO boom. This slow-down in launches could create opportunities in under-supplied segments. Developers are rethinking launches based on real end-user demand rather than speculative trends, and more are incorporating green features, compact unit types, and bundled lifestyle services to attract younger buyers.

7. Emerging Drivers: Retail, Leisure & Logistics

New growth drivers are shaping Manila real estate. Retail leasing is recovering as consumers return to malls and lifestyle centers. The leisure sector is also rebounding, thanks to stronger domestic tourism. Meanwhile, demand for industrial and logistics spaces, particularly those tied to e-commerce and electric vehicle manufacturing, is attracting new investment. These segments offer more resilient opportunities compared to saturated residential offerings. Investors looking beyond traditional condos are turning to mixed-use developments with ground-floor retail, warehouse conversions, and horizontal estates catering to evolving mobility and commerce needs.

8. Key Risks & Strategic Wins to Watch

Key risks remain: oversupply in mid-market housing and traditional offices, policy uncertainties (e.g., possible changes in capital gains tax), and geopolitical tensions affecting investor confidence. However, Colliers highlights potential strategic wins in green buildings, mixed-use developments, and experience-focused real estate—projects that emphasize health, sustainability, and integrated living. The winners in the next cycle will be those who adapt early, offer lifestyle-oriented products, and align with macro shifts such as smart infrastructure, remote work flexibility, and climate-conscious design.

Strategic Takeaways for Manila Real Estate Stakeholders

What It Means for You

• For Investors: Focus on submarkets with constrained supply or those benefiting from infrastructure upgrades. Consider mixed-use or logistics-based investments for stronger returns.

• For Developers: Defer mid-market launches and prioritize high-yield segments. Embrace sustainability and flexible layouts.

• For Lenders: Leverage low interest rates to support strategic lending in growth areas.

• For Tenants and Home Buyers: Explore available inventory in central locations as pricing remains competitive.

  
  

Selectivity Is the New Strategy

Colliers’ Q2 2025 report makes it clear—Manila real estate is shifting. While borrowing conditions are improving and sectoral opportunities are emerging, risks from oversupply and demand mismatch linger. The next wave of growth will come from stakeholders who act with precision: analyzing data, spotting under-served sectors, and investing in quality rather than quantity.

Whether you're buying, leasing, building, or lending—the key to success in 2025 and beyond is selectivity. Stay informed. Stay agile. And stay ahead in Manila real estate.

SOURCE:

https://www.colliers.com/en-hk/research/q2-2025-colliers-quarterly-market-report