Parañaque vs. Makati: Which City tops the listin Philippine Real Estate?

In the first quarter of 2026, Makati City captured 77,900 square meters in office transactions — more than half of its total demand for all of 2025, in just three months. That single figure tells you something important about the current state of Philippine real estate: the traditional central business districts are not fading. They are consolidating their position, even as the broader market shows signs of caution.

This is not a story about one city outperforming another in a simple way. Parañaque and Makati serve fundamentally different roles in Metro Manila’s property ecosystem. Makati is the established financial and commercial core, where land is scarce and prices reflect decades of built infrastructure. Parañaque is a sprawling gateway city, shaped by airport proximity, reclamation projects, and a more residential character. Comparing them requires understanding what each city actually offers — and to whom.

The timing matters. The BSP’s Residential Real Estate Price Index has decelerated to just 1.9 percent growth year-on-year as of Q3 2025, down from 7.55 percent in Q2. Luxury condo prices in Metro Manila’s central business districts have fallen for three consecutive quarters. Meanwhile, rental yields in established areas like Salcedo Village tell a different story from what you might find in Parañaque’s newer developments. The gap between these two cities is not just about location — it is about what phase of the property cycle each one occupies.

What Each City Actually Offers a Buyer or Investor

Makati’s advantage is density. The city’s office market absorbed 77,900 square meters in a single quarter because the occupiers — traditional firms at 61 percent of take-up and IT-BPM at 34 percent — need to be where the talent and infrastructure already exist. That demand spills into the residential market, but not uniformly. The luxury segment has softened, with average prices for a three-bedroom condo in Metro Manila’s CBDs falling 2.04 percent year-on-year to PHP 202,590 per square meter in Q3 2025. That is the third consecutive quarter of decline.

Parañaque operates on a different logic. Its residential market is more fragmented, with subdivisions, mid-rise condos, and reclamation-area developments competing for buyers who are often priced out of Makati and BGC. The city benefits from NAIA’s expansion and the ongoing development of the Entertainment City corridor, but it also carries more execution risk. Infrastructure timelines slip. Reclamation projects face regulatory hurdles. For a buyer, the trade-off is clear: lower entry cost against higher uncertainty about future value.

Location, Due Diligence, and the Risks That Change the Outcome

The most important distinction between these two cities is not price per square meter — it is the nature of the market itself. Makati is a replacement market. Most transactions involve existing buildings changing hands, with values supported by decades of proven demand. Parañaque is a growth market. Much of its value depends on future developments that have not yet materialised. That difference determines what kind of due diligence matters.

In Makati, the primary risk is overpaying for an aging asset. A condominium built in the 1990s may have excellent location but outdated plumbing, elevator systems, and association governance. The due diligence required for older properties — checking the building’s structural audit, reserve fund, and pending special assessments — is often more important than the location itself.

In Parañaque, the risk is different. Unsold inventory across Metro Manila remains elevated at 31 months of supply. That means it would take over two and a half years to sell all available units at the current sales pace. Parañaque’s newer developments are particularly exposed to this oversupply because they compete directly with similar projects in Las Piñas, Muntinlupa, and Cavite. A buyer who purchases in a pre-selling development today may find that the same unit type is available at a discount from another developer two years from now.

There is also a regulatory layer that many buyers overlook. The Department of Human Settlements and Urban Development (DHSUD) requires all pre-selling projects to have a license to sell. If a developer has not secured this, the contract to sell may be unenforceable. This is not a theoretical risk — several developers in the southern corridor have faced suspension orders in recent years. Buyers should verify the project’s DHSUD registration number before signing any reservation agreement.

Legal, Ownership, and Financing Nuances That Catch Buyers Off Guard

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Foreign Ownership Rules Apply Differently in Each City

The Philippine Constitution restricts land ownership to Filipino citizens. Foreign buyers can own condominium units, but only up to 40 percent of the total units in a building. This rule applies equally in Makati and Parañaque. However, the practical effect differs. Makati’s high-end condominiums often have a higher proportion of foreign buyers, meaning the 40 percent cap can be reached more quickly. In Parañaque, where the market is more domestically driven, foreign buyers may find more availability — but also less liquidity when it is time to sell.

Capital Gains Tax and Documentary Stamp Tax Are Not Optional

Many first-time buyers underestimate the transaction costs. The seller is liable for the capital gains tax (CGT) of 6 percent of the selling price or zonal value, whichever is higher. The buyer pays the documentary stamp tax (DST) of 1.5 percent. In practice, these costs are often negotiated into the purchase price. On a PHP 10 million property, that is PHP 750,000 in taxes alone — before broker fees, transfer taxes, and registration costs. Buyers in both cities should budget at least 8 to 10 percent above the purchase price for closing costs.

Financing Conditions Are Tightening

The BSP’s policy rate currently sits at 4.25 percent, down from its peak but still elevated compared to pre-pandemic levels. Banks are applying stricter loan-to-value (LTV) ratios, particularly for pre-selling properties where the collateral does not yet exist. A buyer in Parañaque purchasing a pre-selling unit may need a larger down payment — often 20 to 30 percent — compared to 10 to 15 percent for an RFO unit in Makati. The approval timeline also differs: banks typically require a completed appraisal for RFO units, which takes two to three weeks, while pre-selling units are approved based on the developer’s track record and the buyer’s credit profile.

Title Verification Is Non-Negotiable

Whether buying in Makati or Parañaque, the process of verifying the Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT) is the same. The buyer or their legal counsel must request a certified true copy from the Registry of Deeds and check for liens, encumbrances, or adverse claims. This step is especially important in Parañaque, where some subdivisions were originally developed as resort or agricultural land and later reclassified. If the title still reflects the old classification, the property may not be legally suitable for residential use.

How to Decide Between Makati and Parañaque

Match the City to Your Timeline

If you need a property that will generate rental income within the next 12 months, Makati’s RFO units are the safer choice. The office market is absorbing space at a record pace, and the residential vacancy rate in the CBDs is lower than the Metro Manila average. Parañaque makes more sense if your timeline is five to ten years and you are willing to wait for infrastructure projects to mature. The NAIA expansion, the LRT-1 extension to Baclaran, and the ongoing reclamation projects could significantly increase property values — but none of these are guaranteed to finish on schedule.

Compare Financing Options Before You Choose

Banks treat Makati and Parañaque properties differently. A Makati condominium in a well-known development by a top-tier developer — such as Ayala Land or SM Development Corporation — will typically qualify for the best LTV ratios and interest rates. Parañaque properties, especially those in newer or smaller developments, may face higher scrutiny. The top three developers posted PHP 61.1 billion in combined revenue in the first half of 2025, up 7.5 percent year-on-year, which signals that bank appetite for their projects remains strong. For smaller developers, expect tighter lending terms.

Understand the Rental Yield Trade-Off

Metro Manila’s primary rental yields are at 3.8 percent, while secondary units yield 4.6 percent. In Makati, older condominiums in areas like Salcedo Village or Legazpi Village often fall into the secondary category, meaning they can generate higher cash flow than a brand-new unit in the same city. In Parañaque, most available stock is primary — newly built and competing with other new developments — so yields tend to be lower until the building ages and the surrounding area matures.

• 1
  Verify the Developer’s Track Record

  Check how many projects the developer has completed on time. For pre-selling units, request the DHSUD license-to-sell number and verify it online. For RFO units, request the certificate of completion and occupancy permit.

• 2
  Get Pre-Approved for Financing

  Before signing any reservation agreement, obtain a pre-approval letter from at least two banks. Compare LTV ratios, interest rates, and processing timelines. Factor in the documentary stamp tax and transfer tax when calculating your total cash requirement.

• 3
  Conduct a Physical Inspection

  For RFO units, inspect the unit and common areas personally. Check for water damage, electrical issues, and the condition of building systems. For pre-selling units, visit the developer’s completed projects to assess construction quality.

• 4
  Engage a Independent Legal Counsel

  Do not rely on the developer’s in-house lawyer. Hire your own counsel to review the contract to sell, verify the title, and confirm that all taxes and fees are properly disclosed. This is especially important for foreign buyers navigating the 40 percent condominium cap.

Watch for Policy Shifts That Could Change the Market

The BSP’s policy rate at 4.25 percent may continue to adjust depending on inflation and GDP growth, which slowed to 4.4 percent in 2025. A rate cut would lower mortgage costs and potentially stimulate demand, benefiting both cities. A rate hike would have the opposite effect. The IMF has downgraded its 2025 growth forecast for the Philippines to 5.1 percent, and the World Bank has done the same. These macroeconomic signals matter more for Parañaque, where property values are more sensitive to future growth expectations, than for Makati, where values are anchored in existing demand.

Frequently Asked Questions

Making Your Decision

Neither city is objectively better. Makati rewards patience and capital — its market is proven but expensive, and the luxury segment is currently softening. Parañaque rewards conviction and a longer timeline — its potential depends on infrastructure that has not yet been fully delivered. The right choice depends on your budget, your holding period, and your tolerance for uncertainty. Verify every claim. Check every title. And never assume that what worked in one city will work in the other. If this was useful, you might also want to read how emerging cities outside Metro Manila are reshaping investment strategies.

Sources

Is Salcedo Square a Hidden Gem or Overrated? Rent vs. Buy Dilemma — A closer look at rental dynamics in one of Makati’s most walkable neighborhoods.

BF Resort Village: Navigating the Realities of Living in a Former Resort — Practical due diligence lessons for buyers considering Parañaque’s unique subdivisions.

Key Takeaways: 1Q 2026 Philippine Property Market Report. Leechiu Property Consultants, 2026.

Philippines Housing Market Snapshot. Global Property Guide, 2025.

Mapping the Property Sector in 2026. Manila Bulletin, 2026.