Pump-priming industrial, leisure sectors seen to aid inclusive growth

PHILIPPINE PROPERTY has been experiencing some headwinds. Despite this, potential for exponential growth beyond 2025 looks promising.

Two sectors we need to focus on are hotel and industrial sectors. It can’t be denied that the country has been having a difficult time welcoming more international visitors post-covid. But the growth prospects being seen by foreign hotel brands as well as local hospitality players are immense, especially given the government’s promise of modernizing more airports. Attracting more tourists bodes well for the country, as the sector is one of the key job-generating segments of our economy, benefiting a souvenir seller and conglomerates building hotels.

The industrial sector, on the other hand, has shown resilience even at the height of covid restrictions. But the challenge of attracting more high-value manufacturers remains, especially if the government wants to provide more employment opportunities in the countryside. While there’s ample industrial space for locators as developed by private players, the public sector needs to do its part and improve business registration systems, further simplify tax rules, honor sanctity of contracts, efficiently build more infrastructure, and improve the Philippines’ global anti-corruption rankings.

GOVERNMENT UNLIKELY TO MEET TOURIST ARRIVAL TARGET, AS LOCAL TRAVELERS LIFT HOTEL DEMAND
Foreign arrivals reached 4.8 million as of the first 10 months of 2025, down 2.3% year on year and behind the government’s full-year target of 7.7 million set in 2024. The Tourism department is looking at other foreign markets (India, Canada and France) to fill the void left by subpar arrivals from South Korea and China. The Philippine government’s goal is to attract 12 million international tourists in 2028.

Meanwhile, Metro Manila occupancy rates are likely to hover above 60% (vs. 72% in 2019) despite lower foreign arrivals. Local tourists are likely to partly offset lower than expected foreign arrivals. Meanwhile, in-person events will continue driving the demand for meetings, incentives, conferences and exhibition (MICE) facilities. This should also raise daily rates and occupancies.

There is a strong case for the Philippine leisure sector to diversify its tourism markets and expand MICE facilities especially now that conferences and business events continue to flourish. Colliers believes that the domestic market will likely help fill the void left by plummeting South Korean and Chinese tourists so it’s pivotal for hotel operators and other leisure-related businesses to continue innovating to corner more domestic travelers.

CENTRAL LUZON’S NEW INDUSTRIAL SUPPLY TO OUTPACE SOUTH LUZON’S
From 2026 to 2028, Colliers sees the delivery of 870 hectares of new industrial supply in Central Luzon, more than quadruple compared to the 200 hectares of expected new supply in Southern Luzon during the same period.

With an improving business environment and bullish prospects for the region, we see more high-value manufacturers locating in Central Luzon, especially in Pampanga, Tarlac, Bulacan, and Bataan.

Industrial park and modern warehouse developers in Central Luzon should be mindful of the requirements of new and expanding locators in the region. We also encourage industrial developers to build more PEZA-accredited warehouses in Central Luzon, especially in Clark in Pampanga and Capas in Tarlac due to their strategic locations and proximity to the Clark International Airport.

HIGHER-VALUE LOCATORS TO DRIVE INDUSTRIAL SPACE ABSORPTION
Colliers expects a downward pressure on pricing (land leasehold and warehouse rates) in South Luzon due to rising vacancy as a result of sizable new supply, as well as slowdown in demand for big-box warehouses. The rise in vacancy should be partly tamed by previous investment commitments likely to materialize over the next 12 months.

Overall, we see manufacturers of semiconductors, consumer goods, cosmetics, renewable energy components and automotive firms including electric vehicles (EVs) driving industrial demand over the next 12 months.

LAND LEASE EXTENSION A BOON TO INDUSTRIAL SECTOR
In August 2025, President Marcos signed into law Republic Act (RA) No. 12252, liberalizing the lease of private lands by foreign investors. The law extends the stability of long-term lease contracts for industrial estates, factories, agro-industrial ventures, tourism, agriculture, agroforestry, and ecological conservation from 50+25 years to up to 99 years. In our opinion, the law’s implementation will be crucial in attracting more foreign manufacturers into the country.

Developers with expansive industrial footprint should also take advantage of the entry and expansion of manufacturing locators by enticing them to put up facilities within their industrial parks. With more investments in the country given the land lease term extension, Colliers sees the creation and expansion of more industrial parks in Central Luzon and the Cavite-Laguna-Batangas (Calaba) corridor.

Joey Roi Bondoc is the director and head of Research of Colliers Philippines.

joey.bondoc@colliers.com