Iran War's Shadow: Philippines Real Estate Market Outlook for 2026

The Philippines enters the second half of 2026 with its real estate industry navigating unusual conditions. Lobien Realty Group breaks down the outlook into three economic scenarios that show how the Iran war could affect the sector for the rest of the year. These scenarios—which are now being tested by an actual cycle of escalation and pause–are benchmarked against the International Monetary Fund’s baseline-adverse-severe framework, the World Bank’s 3.7 percent growth forecast, and the Asian Development Bank’s 2.8 percent to 4.4 percent range. Our “Worst Case” oil band captured the wartime peak almost exactly in April, while our “Base Case” band matched the trading range during the June ceasefire. A fresh spike above $100 a barrel in mid-July, followed by a sharp retreat, showed the same Worst-to-Base swing playing out a second time, all within a single quarter. The June 17 ceasefire memorandum opened a 60-day negotiation window meant to run until mid-August. However, the truce collapsed after only about three weeks, when fresh US strikes and Iranian retaliation resumed in early July. July 2026 is worth recapping. The ceasefire broke down around July 8, and by July 24. The US military had carried out 13 consecutive nights of strikes on Iran. Saudi Arabia also struck Iran-backed Houthi targets after attacks on its vessels, while traffic through the Strait of Hormuz again collapsed amid renewed disruption. A pause took hold around July 25 to 27 after Iran asked mediators to arrange a fresh round of talks. Brent crude fell 16 percent over three sessions—its steepest slide in six years, as Iranian and Omani officials met directly in Tehran over Strait shipping. Iran has been explicit that this is not a ceasefire and that it is negotiating only with Oman, keeping Scenario 1 firmly in play even as oil and the peso both price in relief. Philippine real estate hopes for a de-escalation and fears re-escalation the most. However, adults in the room will agree that the most probable and pragmatic scenario will be the maintenance of a fragile ceasefire. Under a fragile ceasefire, our most probable path at roughly 50 percent weight, real estate divides by segment. Office space will remain resilient. Metro Manila rent stays at P1,000 per sqm even as vacancy holds near 19 percent, because the business process outsourcing (BPO) sector’s share of office demand remains robust. This could translate to roughly 500,000 sqm of leasing demand for the full year. A conservative supply pipeline of only 640,000 sqm through 2029 is also well below the roughly 1 million sqm supplied annually from 2017 to 2019. Definitely, the COVID-19 pandemic, the resulting weak global economy, and the 2023 ban on Philippine offshore gaming operators (Pogos) continue to have lingering effects on the office market. Other risks include lower Philippine economic growth, higher-for-longer interest rates and inflation, and contractions in foreign direct investment and construction. Residential real estate will continue its recalibration story. NCR condominium prices rose 13.2 percent quarter-on-quarter. Approved condominium floor area, however, fell to 58,734 sqm in the second quarter from 141,735 sqm in the first. This suggests that developers are pulling back on new launches while pushing the sale of inventory that has already been built. Balance GMA now accounts for 40 percent of residential loans, against NCR’s 29 percent. Houses and condominiums in the Balance GMA are also 57 percent and 33 percent cheaper than those in NCR, respectively. The risk is that roughly 15 percent of remittances from overseas Filipino workers (OFWs) come from the Middle East and are therefore directly exposed to the war. Warehousing will continue growing, riding on a P2.74-trillion digital economy. However, the pace should moderate rather than repeat the near-doubling recorded in 2024, as BMI and Nomura both flag softening consumer spending alongside rising, fuel-driven logistics costs. History offers a useful check on whether these numbers are reasonable. The 1990–1991 Gulf War provides the closest reference. Iraq’s invasion of Kuwait doubled oil prices within months, comparable in magnitude to today’s shock, before a ceasefire arrived roughly six months later. What matters most is what happened next. Even after oil prices fell rapidly when the war ended, the US recession persisted for several more months, with output and confidence lagging the price recovery by two to four quarters. Real normalization may not arrive until well into 2027, giving real estate a softer start to next year even after the war itself is over Can the industry repeat its 2025 performance in 2026? The evidence says yes, and that itself is the story. Real estate grew by 6.8 percent in the first quarter, adding some P26 billion, even as construction contracted and GDP forecasts continued to fall. Matching 2025 would not be a disappointing outcome. It would confirm that an industry tested by the pandemic, the POGO exit, the Russo-Ukrainian war, and now the Iran war can continue absorbing shocks that would flatten less durable sectors. The past month has provided an even sterner test–a signed ceasefire collapsed, 13 straight nights of strikes followed, and oil swung from $84 to above $100 before retreating again. Yet real estate’s underlying numbers have not required a rewrite because of these developments. That resilience, rather than any single quarter’s number, is what deserves the headline. The author is the CEO of Lobien Realty Group