Defensive real estate sectors draw investor interest

INVESTORS are increasingly favoring defensive and income-generating property assets such as malls, logistics facilities, data centers, and hotels, according to property consultants and real estate executives, as developers adopt a more cautious stance on expansion amid global economic uncertainty.

“Rather than focus on the disruption from the Middle East conflict, it’s important to understand the long-term structural shifts being driven by an increasingly multipolar and fragmented global environment,” Christopher J. Marriott, chief executive officer of Savills Southeast Asia, said in the Asia Pacific Real Assets Association’s TrendWatch May 2026 report released on Monday.

The report noted that investors across Southeast Asia continue to gravitate toward sectors linked to domestic consumption, manufacturing expansion, and technological infrastructure despite elevated borrowing costs and geopolitical risks.

“In today’s macro environment, sectors that offer recurring income, long-term visibility, and protection against volatility are the most attractive,” RL Commercial REIT, Inc. President and Chief Executive Officer Jericho P. Go said.

“Across these sectors, long-term contracts and predictable cash flows are what make them attractive in uncertain markets,” he added.

Mr. Go identified malls, logistics facilities, data centers, offices, and hotels as among the Philippine market’s more resilient property segments.

The report said retail assets remain attractive because of lease structures that combine fixed minimum rents with percentage-of-sales upside, while logistics facilities benefit from long-term contracts with built-in rental escalations that help offset inflation while supporting supply chain requirements.

The luxury residential segment has also shown resilience, with Manila ranking third in Knight Frank’s Prime International Residential Index.

Hospitality assets are likewise regaining momentum as international operators expand and global brands re-enter key destinations, while the office market remains tenant-led amid competitive rental conditions.

Rick Santos, chairman and chief executive officer of Santos Knight Frank, said the current market environment is favoring sectors backed by structural demand drivers over cyclical recovery plays.

“The current macro environment is effectively acting as a filter — separating sectors with structural demand from those still dependent on cyclical recovery,” he said.

“What we’re seeing is a pause, not a retreat,” he added.

Mr. Marriott added that the Philippines remains exposed to near-term risks as a net energy importer, particularly as tensions involving the Middle East continue to affect fuel prices and inflation expectations. — J.C.A. Gonzales