Daily TribuneIT-BPM demand drives recovery; REITs outshine amid broader market volatility.
Demand for office space rose by 7 percent in the first quarter of this year.
Photograph by Analy Labor for the Daily Tribune @tribunephl_ana
IT-BPM continues to be dominant in the demands for office spaces.
Photograph by Toto Lozano for the Daily Tribune
POGOs — once major players in the office space market — no longer registered any new leases in Q1.
Photograph by Toto Lozano for THE Daily Tribune
Leechiu Commercial Leasing director Mikko Barranda.
The Philippine real estate sector is off to a strong start in 2025, with office property demand rebounding and capital markets demonstrating resilience despite external economic headwinds. According to the Q1 2025 Philippine Property Market Report released by Leechiu Property Consultants Inc., demand for office space rose by 7 percent year-on-year to 355,000 square meters, while real estate investment trusts (REITs) outperformed the broader equities market.
The surge in demand was primarily driven by the Information Technology and Business Process Management (IT-BPM) sector, which accounted for 55 percent of total leasing activity or 195,000 sqm. in Q1 — up from just 37 percent in the same period last year. Traditional office tenants comprised the remaining 45 percent or 160,000 sqm. of demand.
The mandated phase out of Philippine Offshore Gaming Operators (POGOs) continues to shape market dynamics. For the first time in years, POGOs accounted for zero new demand, compared to 42,000 sqm. in Q1 2024. However, their withdrawal is nearly complete.
“POGOs have already relinquished 89 percent of their occupied space,” said Mikko Barranda, Leechiu’s director of commercial leasing. “This tapering off is expected to reduce contractions moving forward.”
Vacancy rates are also improving. Metro Manila’s rate declined to 16 percent from 17 percent quarter-on-quarter, translating to about 80,000 sqm. of absorbed space, while nationwide vacancy eased to 17 percent. Submarkets like Ortigas — Mandaluyong — San Juan and Bonifacio Global City led leasing with 59,000 sqm. and 51,000 sqm., respectively.
Leechiu projects net office take-up to reach 490,000 sqm. by the end of 2025, representing a 16 percent year-on-year increase.
REITs stood out in Q1 as one of the strongest performing asset classes in the capital market. While the Philippine Stock Exchange Index (PSEi) fell by 14.7 precent year-on-year, REITs delivered an average return of 8.7 percent. Robinsons Land REIT (RCR) led the charge with a 20.6 percent gain. “Their tangible portfolios and long-term contracts help cushion them against broader market swings,” said Leechiu managing director Tam Angel.
The capital market’s relative stability has been buoyed by the Bangko Sentral ng Pilipinas’ dovish monetary policy. With March inflation at a 58-month low of 1.8 percent, a 25-basis-point rate cut is anticipated. Lower interest rates are expected to spur more real estate activity, though the full recovery of capital values — particularly in the office and residential sectors — may take up to three years due to lingering vacancies and a backlog of condominium units.
Still, the market outlook remains optimistic. “With a young, expanding workforce and ongoing policy support, both the real estate and capital markets are on track for sustained momentum,” Angel added.
In short, the Philippine property sector is not just enduring — it’s gradually recalibrating and finding new drivers of growth.
