Is Davao’s Land Value Artificially Inflated? Examining the Underbelly of Property Hype

Davao City’s property market is staring down a proposed revision to official land values that could raise assessments by as much as 800 percent in some areas. That figure comes from Oscar D. Tabjie, president of the Chamber of Real Estate and Builders’ Associations (CREBA), who told SunStar Davao that the industry is not against appreciation—but sudden, dramatic jumps of that scale risk making the city uncompetitive. The proposed values, which would set the tax base for millions of residents, have sparked a debate about whether Davao’s land prices reflect genuine economic growth or a speculative bubble waiting to correct.

This isn’t an abstract policy debate. If the proposed schedule passes, a homeowner in a subdivision like Northtown (North Crest) could see their property’s official valuation jump from ₱3,480 per square meter to ₱15,100. That’s a 334 percent increase in the number the city uses to compute real property tax. For a family on a fixed income, the difference between paying tax on ₱3,480/sqm versus ₱15,100/sqm is not a minor adjustment—it’s a monthly budget breaker. The question worth asking is whether these new values reflect what properties could actually sell for, or whether they are a government attempt to capture revenue from a market that was temporarily inflated by forces that have already left the city.

Davao has long been marketed as a safe, livable alternative to Metro Manila. Numbeo data from early 2026 gives the city a Safety Index of around 71.4, ranking it among the safer urban centers in Southeast Asia. That reputation has drawn investors and migrants, pushing average condominium prices into six figures per square meter in prime districts like Lanang and Bajada. But safety and livability don’t automatically translate into sustainable price growth, especially when the economic engine underneath is showing cracks. The national debt-to-GDP ratio has breached 63 percent—the highest in two decades—and the national housing backlog exceeds 6.5 million units. Meanwhile, Davao’s inflation for the bottom 30 percent of households hit 3.6 percent in January 2026, driven partly by an 8.5 percent jump in utility costs. Rising property valuations eventually squeeze the people who can least afford it.

How Davao’s Property Segments Compare Under the New Valuations

The property market in Davao isn’t a monolith. A prime lot on Pichon Street and a socialized housing unit in Buhangin operate under completely different economic realities, yet both are subject to the same assessment framework. The proposed schedule applies a standardized formula across 164 barangays, with BIR zonal values ranging from a low of ₱40 per square meter to a high of ₱126,600. The average sits at ₱63,320/sqm, but market rates are estimated to be 1.5 to 2.5 times higher than those BIR figures. That gap—between what the government says a property is worth for tax purposes and what it might actually sell for—is where the tension lives.

For a buyer looking at a 150-square-meter lot in a prime area, the difference between the BIR zonal rate and the actual market price could mean leaving nearly ₱4.7 million on the table if they sell at the government’s minimum valuation. But for a homeowner in Agdao, the gap between ₱2,860/sqm and ₱12,300/sqm isn’t about profit—it’s about whether they can afford to stay.

The POGO Hangover and the Distortion It Left Behind

One of the most overlooked factors in Davao’s valuation debate is the lingering effect of Philippine Offshore Gaming Operators (POGOs). The Federation of Philippine Industries (FPI) has explicitly called for a review of zonal values, arguing that property prices were artificially driven up during the previous administration when POGOs were actively encouraged. FPI Chairman Emeritus Jesus L. Arranza described the POGO-driven price increases as “not organic” but rather “fueled by government policy.” President Ferdinand R. Marcos, Jr. banned all offshore gaming operations in his 2024 State of the Nation Address, but the tax base hasn’t caught up.

The implication is straightforward: if Davao’s proposed valuations were influenced by the same POGO-era distortions seen in Metro Manila, then the city is essentially asking residents to pay taxes on a market that no longer exists. Metro Manila is still grappling with nearly 75,000 unsold condo units, and developers there are offering aggressive promotions just to move inventory. Davao hasn’t reached that level of oversupply, but the pattern is worth watching. If the city’s valuations are based on peak POGO-era demand, and that demand has evaporated, then the tax burden becomes a penalty for past policy rather than a reflection of current economic reality.

Ownership Costs, Financing Traps, and the Tax Squeeze

Understanding the proposed valuation changes requires looking at how they interact with the actual costs of owning property in Davao. The table below breaks down the key taxes and how they would be affected by a higher zonal value.

→ Scroll right to see all columns

The most immediate consequence for a buyer or seller is the increase in transaction taxes. If you sell a property in Bajada at the proposed ₱60,100/sqm, the CGT and DST are computed on that figure even if the actual market price has softened. For a 200-square-meter lot, that’s a tax bill of roughly ₱90,150 in DST alone—before you even get to the CGT. These are not hypothetical costs; they are due at the time of sale or transfer.

How Condo Owners Face a Double Hit

Condo owners in Davao face a particularly tricky situation. As land values under buildings triple, homeowners’ association (HOA) dues must rise to cover the building’s increased real property tax. At the same time, insurance premiums are climbing as insurers adjust to the government’s new, higher replacement-cost valuations. A unit owner in a building on J.P. Laurel Avenue could see their monthly association fees jump significantly, not because of any improvement in services, but purely because the land underneath the building is now valued at ₱60,100/sqm instead of the previous rate. This is the kind of cost that catches buyers off guard—they focus on the purchase price and monthly amortization, but the recurring tax and HDU increases can quietly erode the affordability of a unit over time.

The Pre-Selling Risk in a Shifting Market

For those considering pre-selling condominium units in Davao, the valuation uncertainty adds another layer of risk. Pre-selling prices are typically set based on projected future values. If the market was inflated by POGO-era demand and the city’s official valuations are now being revised upward to match that peak, a buyer who commits to a pre-selling unit today might find themselves paying taxes on a value that the market can no longer support by the time the building is completed. This is not a prediction of a crash, but it is a scenario worth stress-testing. If interest rates remain around 4.5 percent and the oversupply in Metro Manila continues to weigh on developer sentiment, Davao’s pre-selling market could face a correction that leaves early buyers holding overvalued contracts.

What Buyers and Investors Should Actually Do

The debate over Davao’s land values is not going to be resolved overnight. Councilor Danilo C. Dayanghirang has already signaled that the city council will scrutinize the proposed schedule, noting that the consultation process has been limited in reach and that residents are already struggling with existing tax burdens including VAT and other levies. For anyone with property exposure in Davao—whether you own, are buying, or are just watching—there are concrete steps worth taking.

Verify the Proposed Zonal Value for Your Specific Barangay

The proposed values vary dramatically by location. A property in Ladislawa at ₱37,000/sqm is in a different universe from a lot in NHA Buhangin at ₱12,300/sqm. The first step is to check the specific schedule for your barangay. The BIR publishes zonal values, and the city assessor’s office should have the proposed revisions available for public inspection. Do not rely on general averages—the difference between ₱40/sqm and ₱126,600/sqm is too wide for averages to be meaningful.

Calculate the Real Carrying Cost, Not Just the Purchase Price

Most buyers focus on the monthly amortization and the down payment. But the real cost of ownership includes annual real property tax, HOA dues, insurance, and maintenance. If the proposed valuations pass, a homeowner in a subdivision like North Crest could see their annual RPT increase by a factor of four or more. Run the numbers with the proposed values, not the current ones. If the resulting annual tax bill feels uncomfortable at today’s income level, it will only feel worse after a few years of inflation.

Understand the Difference Between Zonal Value and Market Value

This is where many buyers get confused. The zonal value is a tax floor, not a price tag. Just because the government says your property is worth ₱60,100/sqm doesn’t mean you can sell it for that amount. In fact, if the market has softened since the POGO era, the actual selling price could be lower. But you will still pay taxes based on the higher figure. When negotiating a purchase, use the market comparables—recent sales of similar properties in the same area—not the zonal value, to determine what the property is actually worth. The oversupply dynamics in Davao’s condo market suggest that buyers may have more negotiating power than they realize.

Watch for the City Council’s Final Decision

The proposed schedule is not yet law. Councilor Dayanghirang has explicitly stated that the council will scrutinize the formula, which he described as being “made in Manila and then sent back for us to pass as an ordinance.” There is room for the values to be adjusted downward before final approval. Property owners and buyers should attend public consultations, submit formal comments, and track the legislative process. A 300 percent increase is not inevitable—it is a proposal that can be challenged with data and public pressure.

Frequently Asked Questions

The proposed land value revisions in Davao City represent a genuine tension between fiscal necessity and economic reality. The city needs revenue to fund services, and outdated valuations have meant that property taxes have not kept pace with development. But the scale of the proposed increases—and the timing, coming after the POGO-driven distortions have receded—raises legitimate questions about whether the new values reflect what property is actually worth or what the government wishes it were worth. For anyone with a stake in Davao real estate, the next few months of council deliberation will matter more than any market forecast. If this was useful, you might also want to read our analysis of Riverfront Corporate City’s impact on Davao’s property landscape.

Sources

Davao Condo Oversupply: Are We Headed for a Price Crash? — Examines the supply-side pressures that could compound the valuation shock discussed in this article.

Davao property market faces valuation shock. SunStar Davao, 2026.

The 2026 Property Pivot: Why Real Estate Values Are Soaring Amidst an Economic Stalling. Dakbayan.ph, 2026.

BIR Zonal Values 2026 — Davao City. LandValuePH, 2026.

FPI Seeks Zonal Value Review After POGO Expulsion. BusinessWorld, 2026.