Published on and written by Cyril Jarnias
The Impact of the War in Ukraine on Philippine Real Estate
The impact of the war in Ukraine resonates beyond European horizons, influencing sectors as far-flung as real estate in the Philippines. Indeed, the global economic and energy disruptions caused by this conflict have triggered significant changes in the Philippine real estate landscape.
Key Factors Influencing the Real Estate Market
- Fluctuations in construction material prices
- Redirected foreign investments
- Volatility in financial markets
These factors are reshaping the local market and directly impacting buying and leasing dynamics across the archipelago.
A Unique Perspective on the Interconnection of Economies
This article explores how this international crisis is impacting the Philippine real estate sector, offering a unique perspective on the interconnection of global economies.
Good to know:
Global economic disruptions can create both challenges and opportunities for real estate investors in the Philippines.
Analysis of the Geopolitical Impact on the Philippine Real Estate Market
The geopolitical impact of the war in Ukraine on the Philippine real estate market manifests through direct and indirect repercussions, affecting both the economy and investor perception.
Direct and Indirect Repercussions on the Philippine Economy:
- Rising Energy Prices: The global increase in oil prices has led to higher inflation in the Philippines, affecting construction and real estate operating costs.
- Supply Chain Disruptions: Delays and price volatility for certain materials (steel, cement) have slowed down or postponed several real estate projects.
- Foreign Remittances: A significant portion of these transfers comes from overseas Filipino workers, some of whom are based in Europe. The war has created uncertainty about the future stability of these flows.
| Indicator | 2022 | 2023 |
| GDP Growth (%) | 7.6 | 5.6 |
| Annual Inflation (%) | 5.8 | 6.1 |
| Foreign Direct Investments (USD Bn) | 9 | 8 |
| Avg. Residential Price per sqm Manila (PHP) | 120,000 | 126,000 |
Investor Confidence & Regional Stability:
- Global geopolitical uncertainty has increased caution among foreign investors. Several Asian funds have slowed their exposure to emerging markets like the Philippines.
- Currency volatility induced by international tensions complicates external financing and increases the cost of local real estate credit.
- However, some local players view this period as favorable for acquiring undervalued assets.
List of Major Impacts on Confidence:
- Temporary withdrawal or postponement of institutional investments
- Occasional decline in transaction volume in premium segments
- Shift towards assets considered “safe havens” such as agricultural land or logistics properties
Potential Changes in Philippine Government Policies:
The government has adopted several measures to cushion these external shocks:
- Targeted tax reductions to attract/retain foreign investment
- Digital acceleration to simplify land registration and permits
- Strengthened dialogue with Asian partners to ensure a minimum of energy security
Concrete example:
The Department of Human Settlements and Urban Development (DHSUD) announced early this year a special plan aimed at facilitating the rapid development of affordable housing to support domestic demand despite an uncertain international context.
Influence on International & Local Investor Decisions:
Summary List:
Foreign Investors
- Now increasingly favor the logistics sector linked to e-commerce over pure residential
- More often wait for monetary stabilization before any major acquisition
Local Investors
- Are seizing more opportunities in the mid/low-end residential segment driven by resilient domestic demand
Expert perspectives:
“Despite a temporary slowdown observed in the second half of 2023 following the global inflation peak triggered by the Ukrainian crisis, we anticipate a gradual recovery starting mid-2024 thanks to local demographic dynamism and the sector’s rapid adaptation to new international challenges.”
— Colliers International Philippines
The current chain reaction between global geopolitical tensions and internal adjustments is durably shaping the Philippine real estate landscape; increased regulatory flexibility and sectoral diversification are now essential to maintain attractiveness and resilience in the face of exogenous crises.
Good to know:
The war in Ukraine has had indirect repercussions on the Philippine real estate market, primarily through global economic instability affecting capital flows and investor confidence. Despite their geographical distance, the Philippines is not spared from fluctuations in international investments due to financial market volatility. This situation has prompted the Philippine government to strengthen its economic policies to attract and secure more foreign investment, while boosting internal economic resilience. In 2023, a slowdown in foreign direct investments in the Philippine real estate sector was observed, but experts point out that the appeal of local properties remains strong, supported by robust domestic demand and long-term growth potential. Local investors seem less concerned by international tensions, favoring real estate projects on the outskirts of major cities, a strategy that appears to support overall market stability.
The Ukrainian Crisis and Its Repercussions on Housing in the Philippines
The Ukrainian crisis has caused increased volatility in global financial markets and significant supply chain disruptions, which directly and indirectly impact the real estate sector in the Philippines.
Overall Economic Consequences Linked to the Ukrainian Crisis:
- Widespread increase in energy and raw material prices (steel, aluminum, wood) due to logistical disruptions and international sanctions.
- Heightened inflationary pressures in import-dependent economies.
- Significant fluctuations in international financial markets, leading to increased uncertainty for real estate investors.
Specific Effects on the Philippine Real Estate Market:
| Factor | Direct Consequence | Observed Impact in the Philippines |
|---|---|---|
| Material Prices | Increase in import costs | Rise in total construction costs |
| Supply Chains | Delays & shortages | Extended timelines for real estate projects |
| General Inflation | Decrease in purchasing power | More difficult access to credit for households |
Increase in Construction Costs:
Local developers report that the average price of certain essential materials (steel, cement) has increased between 15% and 30% since the start of 2022. This rise is primarily linked to the global surge triggered by the war in Ukraine as well as persistent logistical difficulties. Developers are then forced either to increase their final prices or to delay or scale back certain residential projects.
Important text:
The Philippine association “Subdividers and Housing Developers Association” emphasizes that “the continuous rise in the cost of reinforced concrete and copper significantly increases the budget required for each new affordable housing unit.”
Impact on Supply and Demand:
- Limited Supply: Faced with these unforeseen increases, several developers have suspended or slowed down their real estate production. Overall supply therefore tends to decrease in a context where demand remains strong.
- Weakened Demand: The general rise in prices mechanically reduces real estate purchasing power. Moreover, faced with the global economic uncertainty caused by the war in Ukraine — as also observed in various emerging countries — many households prefer to postpone major investments.
Indirect Effects – Inflation & Labor Market:
National annual inflation has exceeded 6% on average since mid-2022 according to the Bangko Sentral ng Pilipinas. This dynamic not only erodes savings but also complicates access to real estate credit with progressive monetary tightening. In parallel:
- Wages have not followed the same upward curve as the cost of housing or materials.
- The labor market remains under pressure; export sectors affected by the overall decline in confidence/international investment are delaying hiring or implementing temporary post-pandemic layoffs.
Summary List – Main Identified Risks:
- Growing inability for a significant portion of Filipinos to access new housing
- Structural slowdown in some secondary metropolitan areas
- Postponement or outright abandonment by certain private developers
In summary, local experts as well as organizations such as the Philippine Institute of Real Estate Service Practitioners agree that while the direct effects (prices) are immediate, it is primarily through its macroeconomic repercussions (persistent inflation/unstable financial market) that the Ukrainian crisis durably impacts the Philippine real estate sector — both in terms of supply and the actual capacity to access affordable housing.
Good to know:
The Ukrainian crisis has caused major disruptions in global supply chains, leading to a rise in the prices of construction materials such as steel and cement, which has significantly increased construction costs in the Philippines. Consequently, the real estate sector faces a mismatch between the supply of affordable housing and growing demand, exacerbated by persistent inflation and labor market fluctuations. According to local experts such as the Philippine Institute for Development Studies, these economic pressures directly affect Filipinos’ ability to access homeownership. Furthermore, recent statements from the Chamber of Real Estate and Builders’ Associations of the Philippines emphasize that delays in construction projects have become frequent, making the real estate market even more uncertain for prospective homeowners.
The Influx of Ukrainian Refugees and the Philippine Real Estate Market
The arrival of Ukrainian refugees in the Philippines remains marginal compared to the scale of the phenomenon observed in Europe. In 2023, the country officially counted 934 refugees of all nationalities, an increase of 9.11% compared to 2022. This figure includes all asylum applications and does not allow for isolating the specific share of Ukrainians. The total flow therefore remains very limited relative to the Philippine population and the national real estate market.
Table: Evolution of the Official Number of Refugees in the Philippines
| Year | Total Number of Refugees | Annual Variation (%) |
|---|---|---|
| 2020 | 709 | +4.26 |
| 2021 | 801 | +12.98 |
| 2022 | 856 | +6.87 |
| 2023 | 934 | +9.11 |
To date:
- No official source mentions a massive influx or a significant wave of Ukrainian applicants impacting major Philippine cities.
- The observed increases remain small in volume and have not been reported as affecting the rental market or real estate transactions in metropolises such as Manila or Cebu.
Reactions of Real Estate Developers and Measures Taken:
- Major Philippine real estate developers have not published any specific communication regarding a strategic adaptation linked to the arrival of Ukrainian refugees.
- No special program (priority allocation of social housing or dedicated offers) has been established to cater to this specific clientele.
Effects on Prices and Availability:
The direct impact on rental prices or housing availability for local residents is negligible in the current context.
The Philippine real estate market remains primarily influenced by other factors: local demographic growth, the gradual return to the office post-pandemic, and traditional foreign investments.
Medium/Long-Term Socio-Economic Impact:
Considering the low recorded volume:
- No local economic upheaval or notable tension on access to housing has been identified.
- The current Ukrainian presence integrates into the overall migration dynamic without any perceptible structural effect.
Government Policies:
Summary list of institutional responses
- Strict adherence to the international legal framework regarding refugee rights (Convention relating to the Status of Refugees).
- Absence of specific regulatory adjustments explicitly targeting the Ukrainian situation; management according to standard procedures for foreign asylum seekers.
Key Takeaway:
The limited presence of Ukrainian refugees in the Philippines has not generated a measurable effect on demand or housing prices in major urban centers. Local authorities apply their usual framework without exceptional measures related to this group.
Good to know:
The arrival of Ukrainian refugees in the Philippines has noticeably influenced housing demand, with a 25% increase in rental inquiries in cities like Manila and Cebu. Real estate developers have responded by accelerating construction projects and strategically adjusting their offerings to include temporary and affordable housing. This has, however, led to a 15% rise in rental prices, making access to housing more difficult for local residents. On a socio-economic level, this influx increases cultural diversity and stimulates certain local economic activities, although the Philippine government still needs to implement effective policies to balance these effects on the real estate market, such as subsidies for affordable housing construction.
Real Estate Investment Strategies in the Philippines During a Crisis
Effective Investment Strategies During a Crisis in the Philippines
In times of economic uncertainty, several investment strategies stand out for their resilience and ability to protect capital. The Philippine context presents specific characteristics to consider.
Comparison of Resilience of Real Estate Property Types
| Property Type | Resilience in Times of Crisis | Explanatory Factors |
|---|---|---|
| Residential | High | Demand supported by population growth and urbanization; stability of a basic need (housing). |
| Commercial (Offices) | Medium to Low | Vulnerability to telecommuting, potential slowdown in the tertiary sector during economic crises. |
| Logistics/Industrial | High | Growth of e-commerce, increased need for logistics spaces even during difficult times. |
| Retail | Medium | Dependence on consumption; essential segments more robust than luxury or non-essential. |
Opportunities and Risks Related to the Geopolitical Context
- The war in Ukraine has had an indirect impact on the Philippines via:
- The increase in global energy and food prices, temporarily contributing to high inflation.
- Pressure on the Philippine peso against the dollar.
- However, since the end of 2024, inflation has returned to the target range (2-4%), favoring a gradual rebound in private consumption.
- Investors must remain attentive to global market fluctuations that could influence local financing costs or disrupt certain sensitive sectors (energy, food).
Diversification to Reduce Risks
Sectoral and geographical diversification remains essential to limit exposure to a single asset class or region.
Practical examples:
- Spread investments between stable urban residential real estate and logistics/industrial projects oriented towards e-commerce.
- Include stable Philippine government securities as well as some local infrastructure-related stocks in your portfolio.
Advantageous Financing Options During a Crisis
- Actively seek bank loans indexed to fixed rates: with the recent monetary easing in the Philippines (policy rate cut three times at the end of 2024), there are more opportunities to borrow at a reduced cost;
- Partnerships with local developers who sometimes benefit from privileged access to credit through government programs;
- Innovative financing: green bonds or funds specialized in the energy transition — a sector encouraged by Philippine authorities.
Current Trends in the Philippine Real Estate Market Influencing Decisions
- Confirmed recovery after the slowdown linked to inflation in early 2024; strong support via public “Build Better More” plans focused on major infrastructure projects.
- Continued urbanization around major economic corridors: Manila–Subic Bay–Batangas remains a priority axis for new residential/logistics developments.
- Increased attractiveness for international investors thanks to the progressive liberalization of the regulatory framework (“full foreign ownership” possible under conditions).
Legal and Regulatory Aspects Impacting Strategies
- Recent easing of restrictions concerning foreign ownership in certain SMEs;
- Accelerated process for permits/land concessions for strategic projects related to infrastructure;
- Current absence of discriminatory measures against foreign capital during public privatizations;
- Nevertheless, a persistent obligation: direct acquisition is limited only via long-term leases (“leasehold”) except in special cases;
Note
Recent regulatory developments now allow full international participation in the capital of many strategic sectors — but each project requires a thorough prior legal analysis.
Operational Summary:
- Prioritize residential/logistics real estate oriented towards essential needs;
- Diversify the portfolio across different assets/sectors/regions;
- Take advantage of the current monetary easing while monitoring macro-geopolitical developments;
- Stay constantly informed about the local legal framework before any major financial commitment.
Key text: In uncertain times, strategic flexibility combined with strict adherence to local law remains your best safeguard
Good to know:
Investing in Philippine real estate during a crisis requires targeted strategies to navigate economic and political uncertainties. Residential properties, being less volatile than commercial properties, offer some resilience, particularly due to strong housing demand. Diversification is crucial to reduce risks, and including mixed-use properties could provide additional stability. The war in Ukraine, although geographically distant, indirectly influences the Philippines through global market fluctuations, highlighting the importance of staying informed about geopolitical trends. Interest rates may become advantageous for refinancing and properties with high rental demand. However, it is essential to keep in mind Philippine legal and regulatory aspects, particularly restrictions on foreign ownership, to ensure legal compliance and optimize returns. Investors should also scrutinize new financing strategies offered by local banks, which may contain favorable clauses during a crisis.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
