Decoding Makati’s Real Estate Boom: Opportunities and Overvalued Myths

Makati Central Business District office vacancies are projected to drop from 7.2 percent to just 2.6 percent by 2028, according to Colliers Philippines data. That figure matters because it signals a market where tenants will have fewer options and landlords will hold more negotiating power — a complete reversal from the post-pandemic landscape where vacancies were the dominant story.

This isn’t just an office market story. Makati’s residential segment tells a parallel tale, with luxury and ultra-luxury condominium units breaking price barriers between P700,000 and P900,000 per square meter. Total contract prices for these units range from P200 million to P300 million. These numbers raise a natural question: is Makati genuinely delivering value at these levels, or has the narrative outpaced the fundamentals? The answer depends heavily on which segment of the market you’re looking at and what time horizon you’re working with. For a closer look at how infrastructure spending is reshaping property dynamics in other regions, our analysis of infrastructure projects transforming property values in Bataan offers a useful contrast.

What the Makati Market Actually Looks Like Right Now

Makati’s office market is the tightest in Metro Manila by a wide margin. Compare its 7.2 percent vacancy to Ortigas Center at 11.9 percent, Fort Bonifacio at 15.9 percent, or Quezon City at 21.1 percent. Areas like Alabang (31.6 percent) and the Manila Bay Area (41.4 percent) are in a completely different category. The gap isn’t small — it’s structural. Makati benefits from decades of built-up infrastructure, a concentration of banking headquarters, and tenant preference that has proven resilient through economic cycles.

On the residential side, the upper mid-income to ultra-luxury segments didn’t just survive the pandemic — they held steady while affordable and lower mid-income prices declined. That’s unusual. Typically, a broad economic shock pulls all segments down together. The fact that the top end didn’t budge suggests genuine demand from buyers who weren’t liquidity-constrained and who see Makati as a long-term store of value rather than a speculative flip.

Location Dynamics and the Zoning Wildcard

The most consequential development for Makati’s real estate trajectory isn’t a single project — it’s a proposed rezoning plan being finalized by the Makati Central Estate Association Inc. (MACEA). According to Leechiu Property Consultants, the changes would allow FAR of 16 for hotels and residential, a maximum FAR of 10 for offices, and most lots would get FAR of 3 for retail — with active retail required on the ground floor and open until at least 10 p.m.

This matters because Makati’s current building stock is aging. Many office towers built in the 1990s and early 2000s lack the floor plates, ceiling heights, and sustainability features that modern tenants demand. Rather than renovating piecemeal, developers could tear down and rebuild at higher densities. The rezoning effectively raises the ceiling on what a piece of land in Makati can become.

The live-work-play-shop model — sometimes called the 15-minute city concept — is already operational in Makati’s core. Residents can walk to offices, restaurants, grocery stores, and medical facilities without a car. That convenience is a major driver of the premium pricing in residential units. But it also means that new supply is constrained by the simple fact that there isn’t much vacant land left in the CBD. Most new projects will require demolition of existing structures, which adds cost and timeline uncertainty.

For context on how other emerging hubs are positioning themselves, our piece on San Pablo City’s potential to overtake Lipa in real estate value explores a very different growth trajectory — one driven by provincial migration rather than CBD intensification.

Ownership Structures, Financing, and What Buyers Miss

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Foreign Ownership Restrictions Still Apply

Foreign buyers can own condominium units in Makati — the 40 percent foreign ownership cap in condominium corporations applies. But they cannot own land. This is well-known, but what catches some buyers off guard is that the 40 percent cap applies per project, not per building. If a development hits the foreign quota early, later foreign buyers cannot purchase even if units are available. Always request a written confirmation from the developer’s legal department on the current foreign ownership allocation before signing a reservation agreement.

Pre-Selling Risk in a Tight Market

Pre-selling in Makati’s luxury segment typically involves a 5 to 7 year construction timeline. During that period, the developer carries the risk of cost overruns, but the buyer carries the opportunity cost. If the market appreciates faster than expected, the developer may have incentive to delay completion or seek contract renegotiation. If the market softens, the buyer may find themselves holding a unit worth less than the remaining balance. The Cushman & Wakefield Q1 2026 report notes that prime assets in Makati remain stable, but non-prime assets face higher vacancy risks — a distinction that applies to pre-selling projects as well.

Financing Costs Are Higher Than They Appear

With the BSP raising policy rates, borrowing costs for both developers and end-buyers have increased. Average office yields slipped to 6.70 percent in Q1 2026, down 110 basis points quarter-on-quarter. For a buyer financing a P20 million unit, a 1 percent increase in mortgage rates adds roughly P10,000 to the monthly amortisation over a 20-year term. Developers offering in-house financing often embed higher effective interest rates than bank loans, so comparing the total cost over the full loan term — not just the monthly payment — is essential.

Tax Obligations at Purchase and Resale

Buying a Makati condominium triggers several taxes: Documentary Stamp Tax (DST) at 1.5 percent of the selling price or fair market value, whichever is higher; Capital Gains Tax (CGT) at 6 percent if buying from an individual seller; and VAT at 12 percent if buying directly from a developer. These are typically split between buyer and seller by negotiation, but the default in most Philippine transactions is that the buyer shoulders all taxes unless otherwise stated in the contract. On a P20 million unit, that’s at least P300,000 in DST alone before other costs.

What Buyers and Investors Should Actually Do

Verify the Developer’s Track Record in Makati Specifically

A developer with a strong national reputation may have limited experience navigating Makati’s zoning board, barangay clearances, and MACEA coordination. Ask for completed projects within the CBD, not just in Metro Manila. Check whether those projects were delivered on time and whether the homeowners’ association has ongoing disputes with the developer. The Manila Bulletin property outlook notes that over 1.5 million sqm of office space is scheduled for completion through 2029, primarily in Quezon City, Taguig, and Ortigas — not Makati. That means Makati’s supply constraints are likely to persist, which benefits developers who can actually deliver within the CBD.

Compare Pre-Selling and RFO Pricing Carefully

Ready-for-occupancy (RFO) units in Makati typically command a premium over pre-selling prices because the buyer can immediately occupy or lease the unit. But the premium is not always justified. If a pre-selling unit is priced at P700,000 per sqm and an equivalent RFO unit is at P850,000 per sqm, the difference of P150,000 per sqm represents roughly 21 percent. Over a 5-year pre-selling period, that premium needs to be weighed against rental income lost during construction and the risk of market changes. Run the numbers for your specific timeline rather than assuming RFO is always the safer choice.

Understand the 99-Year Land Lease Reform

The 99-year land lease reform signed into law changes the landscape for foreign investors who want long-term control without purchasing land outright. Under the reform, foreign entities can lease land for up to 99 years, renewable. This is particularly relevant for commercial property investors looking at Makati office or retail spaces. The lease structure avoids the 40 percent condominium cap issue entirely, though it requires a different legal setup and typically higher upfront costs for leasehold improvements.

• 1
  Check the Foreign Ownership Allocation

  Request a written certificate from the developer’s legal team stating the current percentage of foreign-owned units in the specific project. Do not rely on verbal assurances from sales agents.

• 2
  Compare Total Financing Costs

  Get a loan offer from at least two banks and the developer’s in-house financing. Calculate the total interest payable over the full term, not just the monthly amortisation. Factor in BSP rate movement scenarios.

• 3
  Verify Zoning Status

  Check with the Makati City Planning and Development Office whether the property’s current zoning matches the developer’s intended use. If the project depends on the proposed MACEA rezoning, get a timeline from the developer and a contingency plan if approval is delayed.

Watch for the Banking Headquarters Pipeline

Four major banking headquarters are under construction in Makati: BDO Corporate Center and China Bank Makati Tower (both expected by 2028), and the new headquarters of BPI and Metrobank (set for 2029). These projects will anchor thousands of high-income employees in the CBD, supporting both office demand and residential rental demand in the surrounding area. For investors, the completion timeline matters — units near these developments may see a price inflection point closer to 2028-2029 rather than immediately.

Frequently Asked Questions

Sources

The Columns Ayala Avenue: Is It Still a Good Investment in the Heart of Makati? — A closer look at one of Makati’s most recognisable residential towers and how it fits into the current market.

Manila’s Infrastructure Revolution: How New Projects Are Reshaping Real Estate — Broader context on how infrastructure spending across the capital region is shifting property dynamics.

Makati CBD to become landlords’ market as office vacancies to drop until 2028. InsiderPH, 2025.

Premium real estate booms in Makati despite Metro Manila market trends. BusinessWorld, 2025.

Philippine MarketBeat Q1 2026. Cushman & Wakefield, 2026.

Mapping the property sector in 2026. Manila Bulletin, 2026.

Leechiu on Makati’s future: Zoning changes to usher in redevelopment boom. Bilyonaryo, 2025.