Oil shock clouds Philippine property sector

The economic fallout from the Middle East crisis may pose risks to the local real estate sector for the remainder of the year, according to Joey Bondoc, Head of Research at Colliers Philippines.

At a Wednesday briefing in Ascott Bonifacio Global City, Bondoc said the conflict’s impact on domestic construction material costs and remittances from overseas Filipino workers (OFWs), along with the potential for elevated mortgage rates, could weigh on the sector moving forward.

“Previously, we’ve looked at the increase in condominium and residential unit prices across the country, and it appears that the pace of price increases has far outpaced wage growth and remittance growth from Filipinos working abroad,” he said.

“We need to factor in the Middle East conflict when forecasting demand. Developers are not just looking at remittances but also at the rising cost of construction materials,” he added.

Bondoc noted the strong correlation between construction material costs and oil prices, with periods of elevated oil prices—such as the current energy crisis—typically driving up construction costs.

“This is affecting smaller contractors. We’ve seen that they often don’t have the budget to purchase machinery,” he said. “They rely on rentals, and rising rental costs for heavy equipment have pushed up the wholesale price index of construction materials.”

The Middle East accounts for roughly 18% of all OFWs, who may shift toward saving and liquidity amid heightened uncertainty, Bondoc said.

“Of course, they need to stick to essentials. They need to save money,” he said, noting that a survey by the Bangko Sentral ng Pilipinas (BSP) showed the share of remittance-receiving households willing to allocate funds to real estate reached a record high of 17% in the first quarter of 2026.

As the conflict continues to push prices higher and erode purchasing power, the BSP last week formally ended its monetary easing cycle with a policy rate hike to combat inflation, which rose to 4.1 percent in March. Bondoc said the increase could further lift mortgage rates, which had already remained elevated even during the easing cycle.

“The recent 25-basis-point increase is a major concern, as it will further raise mortgage rates,” he said. “What we’ve observed is that when mortgage rates rise, overall demand is affected.”

Bondoc added that until mortgage rates—currently around 7.7 to 7.8 percent—decline to about 6 to 6.5 percent, demand for condominiums and other residential properties is likely to remain subdued.