In recent years, home ownership in the Philippines has experienced a significant shift. Millennials are now emerging as important players in the real estate market. Over the past five years, home ownership among these younger generations has increased by 20%, a notable rise that has captured the attention of both policymakers and real estate developers. The pandemic made people realise the importance of having a roof above their heads that gives them a sense of security and stability.

According to the PSA survey, homeownership is rising in the Philippines, with over 60% of families owning their homes. So, understanding the generational trends and behaviours driving the Philippine real estate market is crucial. 

Millennials bring different priorities and preferences to the market than previous generations. These differences can influence everything from the type of properties in demand to the features that buyers are looking for.

While Filipino Gen Z workers have varied perspectives on financial security and future planning, many are still unsure of homeownership. Some prefer living in their parent’s house or obtaining independence by renting to save for other priorities.

According to a survey by PhilCare, a leading HMO company, many in this demographic feel their earnings are sufficient for retirement and enjoying activities like travel and leisure. Despite this optimism, young professionals frequently lack confidence in managing unexpected expenses. Homeownership is often viewed as an unattainable goal rather than a realistic aspiration.

By analysing these shifts, we can gain valuable insights into the future of real estate in the Philippines. This analysis can help policymakers create more effective housing policies, and developers design properties that meet the needs and desires of young buyers. The goal is to ensure that the market evolves to support these new home buyers and foster sustainable growth in the real estate sector.

Current Landscape of Home Ownership in the Philippines

Overview of the Philippine Real Estate Market

  • Economic Growth: According to the Asian Development Bank, the Philippines is forecasted to grow by 6.2% in 2024, driven by a robust service recovery and sustained domestic demand.
  • Growing Middle Class: The government targets achieving an upper middle income from the lower middle status within 1-2 years under the World Bank’s classification. This signifies the growing number of middle-class people with more disposable income. 
  • Urbanisation: According to the PSA census, 54% of Filipinos live in urban areas, and the urban population is increasing by 2.8% annually. As rapid urbanisation continues, more people are moving to cities, hoping for better job opportunities, education, and lifestyles, leading to a higher demand for urban housing​.
  • Culture: Many Filipinos dream of home ownership, a sign of success and stability. Renting is shunned and considered “a waste of money,” but it is still an option for those in the cities. 
  • Real Estate Development: Significant investments in residential, commercial, and mixed-use developments are ongoing, particularly in metropolitan areas like Metro Manila, Cebu, and Davao​.
  • Foreign Investment: The inflow of foreign capital into the real estate sector has been substantial, further boosting market growth​.

Filipino Millennials and Their Attitudes Toward Real Estate

  • According to the Laguna Journal of Multidisciplinary Research, an estimated 47.% of over 66 million Filipino workers are millennials.
  • Roughly 30% of the real estate platform Lamudi’s users are Filipino millennials between 25 and 34.
  • Most Filipino millennials are free of college debts, increasing their savings rate and spending power. 
  • Not only do young Filipinos see homeownership as a goal towards stability, independence, and security, but they also see it as an investment, a tangible asset that can generate wealth over time, and a status symbol, something to be proud of until their later years. 

Factors Driving Home Ownership Among Millennials and Gen Z

Economic Factors: Income Growth, Affordability, and Financial PlanningIncome Growth: According to the Asian Development Bank, the Philippine economy is expected to grow by 6.2% in 2024, supported by rising domestic demand and a recovery in services, particularly tourism​ ​. This economic growth has led to higher disposable incomes, allowing more Millennials and Gen Z individuals to consider home ownership.

Affordability: As the inflation pressure is expected to average 4.0% this year​ , according to the Philippine Statistics Authority, ​many young Filipinos are finding ways to manage their finances better and are looking for more affordable alternatives. Government housing agencies, developers, and banks offer homes with flexible terms, lower interest rates, and deals to make homeownership more affordable. Entry-level housing and studio-type condos are gaining popularity among single or younger households.

Financial Planning: Financial literacy programs and the proliferation of online financial tools have empowered younger generations to plan and save more effectively for home purchases.

Social and Cultural Influences: Changing Family Structures and Priorities

  • Family Structures: Millennials and Gen Z have shifted toward nuclear families and single-person households, increasing demand for housing that accommodates smaller family units. The average household size decreased from 4.6 persons per household in 2010 to 4.1 in 2020. 
  • Priorities: Younger generations prioritise convenience and lifestyle over traditional home ownership values. This has influenced their preference for urban living, closer to work and amenities, and for properties with modern features.
  • Influence of Social Media: According to Global Digital Report 2024, the Philippines is one of the biggest social media consumers, with 73.4% of Filipinos using at least one, which creates a strong influence in shaping market perceptions. Many successful influencers in their 20s release video tours of their dream homes, and young followers aspire to do so, too. 

Technological Advancements: Online Real Estate Platforms and Virtual Tours

  • Online Platforms: The rise of online real estate platforms has made it easier for young buyers to explore, compare, and purchase properties without visiting physical locations. Platforms such as Lamudi and Property24 have become popular among these generations.
  • Virtual Tours: Adopting virtual reality (VR) and 360-degree tours allows potential buyers to view properties remotely, increasing their confidence in purchasing decisions. These technologies have significantly reduced the time and effort required to find and buy a home.

Government Policies and Incentives: Housing Loans and Subsidies and Infrastructure Development

  • Housing Loans: The government has introduced various loan programs to make homeownership more accessible. For example, the Pag-IBIG Fund offers affordable housing loans with low interest rates and flexible payment terms.
  • Subsidies: Government subsidies are also available for first-time home buyers. These can cover a portion of the down payment or reduce the overall cost of the property. These incentives attract young buyers who may not have substantial savings.
  • Infrastructures: The current administration aims to continue focusing on infrastructure development. New roads, highways, airports, and railways create more convenient ways to access urban areas, opening opportunities to develop and expand the suburbs and their real estate.

Preferences and Behaviors of Young Real Estate Buyers

Location Preferences: Urban vs. Suburban Living

Urban Living:

  • Convenience: Millennials and Gen Z favour urban locations because they are close to work, educational institutions, and amenities such as shopping centres, restaurants, and entertainment venues.
  • Connectivity: Urban areas often provide better public transportation options, which is a significant consideration for younger buyers who may prioritise sustainable living and reduced commuting times.
  • Lifestyle: The vibrant lifestyle, cultural activities, and social opportunities available in urban centres are attractive to younger generations who value experiences and convenience.

Suburban Living:

  • Affordability: While urban living is preferred, rising property prices in city centres drive some Millennials and Gen Z to consider suburban areas where property prices are generally lower.
  • Space: Suburban properties often offer more space, which is appealing for those starting families or seeking a quieter environment.

Property Types: Condos, Townhouses, and Single-Family Homes

Condos:

  • Popularity: Condominiums are highly popular among young buyers due to their affordability, convenience, and amenities. They provide a lock-and-leave lifestyle that suits the busy schedules of Millennials and Gen Z. Over 15% of all page views for condominiums on Lamudi are from the 25-34 age bracket. The 25-34 millennial age bracket remains the condo market’s most significant lead share contributor. 
  • Amenities: Many condos come with amenities such as gyms, pools, and communal spaces, which add to their appeal.
  • Convenience: Condos offer access to many amenities and nearby malls, supermarkets, and other places people visit daily. The additional tasks of home repair and maintenance are much lower compared to other types.

Townhouses:

  • Compromise: Townhouses offer a middle ground between condos and single-family homes, providing more space than a condo while being more affordable than a single-family home.
  • Community: They often come with community amenities and shared spaces, fostering a sense of community among residents.

Single-Family Homes:

  • Long-Term Goal: Single-family homes are less popular among younger buyers due to higher costs, but they remain a long-term goal for many. They offer more privacy and space, ideal for those planning to start or expand their families.

Key Features and Amenities: Sustainability, Smart Home Technology, and Community Spaces

Role of Technology in Shaping the Future of Real Estate Transactions

TechnologyImpact
Online PlatformsSimplifies property search, price comparison, and virtual tours for buyers.
Virtual RealityProvides immersive property tours, enhancing buyer confidence and decision-making.
BlockchainEnsures secure and transparent transactions, reducing fraud and increasing trust.
Data AnalyticsHelps understand market trends, buyer preferences, and property values.

Sustainability:

Source: From our study on Global Sustainability, published in The Green Brand report.

  • Eco-Friendly Homes: Millennials and Gen Z prioritise sustainability in their living spaces. They highly value energy-efficient appliances, green building materials, and sustainable practices in property management.
  • Environmental Impact: The awareness of environmental impact influences their purchasing decisions, with many willing to pay a premium for eco-friendly features.

Smart Home Technology:

  • Tech Integration: The integration of smart home technology is a significant draw for younger buyers. Features such as smart thermostats, security systems, and lighting control systems enhance convenience and efficiency.
  • Future-Ready Homes: Properties equipped with the latest technology are considered future-proof, offering long-term benefits and convenience.

Community Spaces:

  • Social Interaction: Community spaces such as lounges, rooftops, and co-working areas provide opportunities for social interaction and networking, which are important for the lifestyle of younger generations.
  • Lifestyle Amenities: Access to amenities like gyms, parks, and recreational areas within the community enhances the living experience and adds value to the property.

Financing and Purchasing Behavior: Down Payments, Mortgage Choices, and Financial Literacy

Down Payments:

  • Challenges: Saving for a down payment remains a significant hurdle for many young buyers. High living costs can make it difficult to accumulate the necessary funds. Some developers offer flexible downpayment terms or deals, but this causes a higher attrition rate. 
  • Assistance Programs: Many use government assistance programs and lower down payment options to enter the housing market.

Mortgage Choices:

  • Flexible Options: Millennials and Gen Z favour flexible mortgage options that allow for lower initial payments and the possibility of refinancing. Variable-rate mortgages and first-time buyer incentives are popular choices.
  • Online Tools: It is common for people to use online mortgage calculators and financial planning tools, which help them compare options and make informed decisions.

Financial Literacy:

  • Education and Awareness: There is a growing emphasis on financial literacy among younger generations. Access to information through online resources, financial advisors, and educational programs helps them navigate the complexities of buying a home.
  • Budget Management: Financial literacy programs have improved their ability to manage budgets, save effectively, and plan for long-term financial goals, making homeownership more attainable.

Implications of Younger Buyers for the Real Estate Market

ImpactWhat it means
Increased DemandHigher interest in homeownership among Millennials drives demand.
Property PricingIncreased demand leads to higher property prices, especially in urban areas.
Market SaturationPotential stabilisation of prices in some areas due to market saturation.

Impact on Property Demand and Pricing

  • Increased Demand: The growing interest in homeownership among Millennials and Gen Z has increased demand for residential properties, particularly in urban areas. This demand will continue rising as more young people enter the housing market​. 
  • Property Pricing: With higher demand, property prices in urban centres have significantly increased. The price rise is particularly notable in cities like Metro Manila, Cebu, and Davao, which have the highest influx of young buyers. This trend has made affordability a critical issue for many first-time buyers​​.
  • Market Saturation: In some areas, the market is approaching saturation, which could stabilise prices over time. However, the current trend points toward increased property values, driven by sustained demand from younger generations.

Shifts in Real Estate Development: Design, Construction, and Marketing Strategies

Shifts in Real Estate Development

AreaDescription
DesignFocus on modern aesthetics, sustainable design, and integration of green building practices.
ConstructionIncorporation of smart technology, flexible spaces, and eco-friendly materials.
MarketingEmphasis on digital marketing, social media engagement, and virtual property tours.

Design:

  • Modern Aesthetics: Developers are increasingly focusing on modern design elements that appeal to the aesthetic preferences of Millennials and Gen Z. Open floor plans, minimalist designs, and the incorporation of natural light are becoming standard features​.
  • Sustainable Design: There has been a significant shift toward sustainable building practices. These include using eco-friendly materials, energy-efficient systems and designs that minimise environmental impact​​.

Construction:

  • Smart Technology Integration: New constructions are integrating smart home technologies from the ground up. This includes automated lighting, heating systems, security features, and connectivity options catering to younger buyers’ tech-savvy nature​​.
  • Flexible Spaces: Developers are creating flexible living spaces that can adapt to different needs, such as remote work, entertainment, and family life. This adaptability is crucial in meeting the diverse demands of younger homeowners.

Marketing Strategies:

  • Digital Marketing: Digital marketing strategies are paramount in reaching younger buyers. Social media, virtual tours, and targeted online advertisements are key tools for engaging this demographic​.
  • Experiential Marketing: Developers employ experiential marketing techniques, such as hosting virtual open houses and interactive property tours, to provide a comprehensive buying experience without needing physical visits​​.

Role of Technology in Shaping the Future of Real Estate Transactions

  • Online Platforms: The proliferation of online real estate platforms has revolutionised how properties are listed, viewed, and purchased. Websites and apps like Lamudi, Property24, and others offer comprehensive tools for property search, price comparison, and virtual tours, making the buying process more accessible and efficient​​. Millennials between the ages of 25 and 34 accounted for 36.8% of sessions, 64.7% of page views, and 36.1% of leads on a real estate platform, according to Lamudi. Another study by Clever found they are 20% less likely to use a real estate agent to find homes than boomers. 
  • Virtual Reality: VR in real estate transactions is becoming increasingly common. These technologies allow potential buyers to take immersive virtual tours of properties, providing a realistic sense of the space without being physically present​​.
  • Blockchain and Smart Contracts: Blockchain technology is starting to play a role in real estate transactions by providing secure and transparent ways to handle contracts and property records. Smart contracts can automate and streamline the buying process, reducing the risk of fraud and ensuring all parties meet their obligations​.

Data Analytics: Advanced data analytics tools are used to understand better market trends, buyer preferences, and property values. This data-driven approach helps developers and real estate agents make informed decisions and tailor their offerings to meet market demand​​.

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Policy Recommendations for Supporting Young Home Buyers

Policy Recommendations for Supporting Young Home Buyers

Policy AreaDescription
Affordable HousingImplement zoning reforms, simplify regulations, and provide financial support.
Sustainable DevelopmentPromote green certifications, renewable energy incentives, and mixed-income housing.
Financial EducationIntegrate financial literacy into school curricula and provide online resources.
Public-Private PartnershipsEncourage joint ventures and incentivise private investment in affordable housing.

Enhancing Access to Affordable Housing: Policy Reforms and Financial Support

Policy Reforms:

  • Zoning Laws: Implementing flexible zoning laws that allow for higher-density housing can increase the availability of affordable units in urban areas. This can help accommodate the growing demand from younger buyers who prefer city living​.
  • Regulatory Simplification: Streamlining the regulatory process for property development can reduce construction costs and, subsequently, the price of housing. Simplified procedures can encourage more developers to invest in affordable housing projects​.

Financial Support:

  • Subsidies and Grants: Providing subsidies or grants to first-time home buyers can significantly lower the barrier to entry. Programs like the Pag-IBIG Fund offer affordable housing loans with low interest rates and flexible payment terms, making it easier for young buyers to secure financing​​.
  • Tax Incentives: Offering tax incentives to buyers and developers can promote the construction and purchase of affordable housing. These incentives can include property tax reductions, deductions for mortgage interest, and credits for sustainable building practices​​.

Promoting Sustainable and Inclusive Development

Sustainable Building Practices:

  • Green Certifications: Encouraging green building certifications like LEED or BERDE can promote sustainable development. These certifications ensure that buildings are energy-efficient, environmentally friendly, and provide a healthier living environment​​.
  • Renewable Energy Incentives: Offering incentives for incorporating renewable energy sources, like solar panels, in new developments can reduce homeowners’ long-term energy costs and contribute to environmental sustainability​.

Inclusive Development:

  • Mixed-Income Housing: Developing mixed-income housing projects can ensure that affordable housing is integrated with market-rate housing, fostering diverse and inclusive communities. This approach can prevent the socioeconomic segregation often accompanying affordable housing initiatives​​.
  • Universal Design: Implementing universal design principles that cater to all individuals, including those with disabilities, can ensure that housing developments are inclusive and accessible to everyone​​.

Strengthening Financial Education and Literacy Programs

Educational Programs:

  • School Curricula: Integrating financial literacy into school curricula can equip young people with the knowledge and skills to manage their finances effectively. This includes understanding mortgages, interest rates, and the home-buying process​.
  • Community Workshops: Hosting community workshops and seminars on financial planning and home ownership can provide prospective buyers with practical guidance. These workshops can be organised by local governments, NGOs, or financial institutions​​.

Online Resources:

  • Financial Tools: Developing and promoting online financial tools like budgeting apps and mortgage calculators can help young buyers plan their finances and make informed home-purchasing decisions​.
  • Information Portals: Creating centralised information portals that provide comprehensive resources on home buying, financial planning, and available support programs can improve access to vital information​​.

Encouraging Public-Private Partnerships for Housing Projects

Collaborative Initiatives:

  • Joint Ventures: Encouraging joint ventures between the government and private developers can leverage the strengths of both sectors to deliver affordable housing projects. These partnerships can combine public funding with private expertise and efficiency​​.
  • Incentive Programs: Establishing incentive programs that reward private developers for participating in affordable housing projects can stimulate investment. Incentives can include tax breaks, fast-tracked planning approvals, and subsidies for construction costs​.

Community Involvement:

  • Stakeholder Engagement: Involving community stakeholders in the planning and development process ensures that housing projects meet the needs and preferences of the intended beneficiaries. This can include public consultations, surveys, and collaborative design workshops​.
  • Long-Term Partnerships: Building long-term partnerships between the public and private sectors can ensure the sustainability and ongoing success of affordable housing initiatives. These partnerships can focus on continuous improvement, maintenance, and community support services​​.

Case Studies and Success Stories

Greenfield District in Mandaluyong, Philippines

Image Credit: Greenfield Development Corporation Facebook page

Background

Greenfield District is a mixed-use development in Mandaluyong City, Metro Manila. It aims to attract young professionals and families looking for sustainable and convenient urban living options.

Approach/Strategy

The development integrates residential, commercial, and recreational spaces, emphasising sustainability and modern amenities. Greenfield District’s marketing campaigns focused on its eco-friendly design, walkability, and proximity to business hubs. They also highlighted the availability of green spaces and community-oriented features.

Outcomes

Greenfield District has become popular among Millennials and Gen Z, who prioritise sustainability and convenience. The project’s success is evidenced by high occupancy rates and positive feedback from residents who appreciate the blend of urban living with green, open spaces. The district serves as a model for integrating sustainability and modern urban design to meet the needs of younger generations​​.

ArthaLand Century Pacific Tower

Image Credit: Edge Buildings

Background

Located in Bonifacio Global City (BGC), Taguig, the ArthaLand Century Pacific Tower is a premier sustainable office and residential building. The project targets environmentally conscious Millennials and Gen Z professionals.

Approach/Strategy

The building is designed with state-of-the-art green technologies, achieving LEED Platinum certification for its eco-friendly construction and operations. Marketing efforts highlighted the building’s energy efficiency, smart home technologies, and modern amenities. ArthaLand also engaged in digital marketing campaigns to reach tech-savvy young buyers.

Outcomes

The ArthaLand Century Pacific Tower has attracted numerous young professionals who value sustainability and innovation in their living and working spaces. The project’s success is reflected in its high occupancy and recognition as one of the leading green buildings in the Philippines. It demonstrates the effectiveness of combining green technologies with strategic marketing to appeal to younger demographics​.

Final Thoughts on the Future of Home Ownership Among Millennials and Gen Z in the Philippines

The future of homeownership among Millennials and Gen Z in the Philippines appears promising, driven by a combination of economic growth, technological advancements, and changing social dynamics. This demographic shift reshapes the real estate market, presenting opportunities and challenges for developers, policymakers, and other stakeholders.

The increasing homeownership rates among Millennials and Gen Z signal a transformative period for the Philippine real estate market. Developers, policymakers, and financial institutions can create a supportive and dynamic real estate environment by understanding and responding to these generations’ unique preferences and behaviours. This proactive approach will meet young buyers’ needs and drive sustainable growth and innovation in the industry for years.

In the heart of Southeast Asia lies the Philippines, a nation where purchasing decisions are as vibrant and complex as its archipelago of over 7,000 islands. Home to over 100 million people, this market is shaped by a unique blend of cultural depth, economic growth, and technological integration, where traditional and modern shopping habits intertwine. 

The Filipino consumer market is marked by strong community bonds, significant digital engagement, and deep brand loyalty, further enriched by economic boosts from overseas remittances. Such a mix demands that brands keen on making their mark or expanding in the Philippines pay close attention to these diverse consumer behaviours. 

Highlighting the emotional nature of Filipino purchases, as noted by marketing guru and Chairman and Chief Innovation Strategist of Mansmith and Fielders, Inc. Josiah Go, “Filipinos buy based on emotion and justify with logic,” emphasises the need for a nuanced approach that considers the emotional, digital, and cultural dimensions shaping consumer preferences in the Philippines.

The Evolution of Filipino Consumerism

The journey of Filipino consumerism from its traditional roots to the modern, globalised commerce landscape is a testament to the country’s adaptability and cultural richness.

Traditional Markets and the Early Economy

Historically, the Philippine economy was deeply rooted in agriculture, with local markets or “palengkes” as the centre of community life and commerce. 

These markets were more than just places to buy and sell goods; they were cultural hubs where social bonds were formed and maintained. The exchange of goods in these settings was personal, with a strong emphasis on face-to-face interactions and establishing trust between buyers and sellers. This tradition laid the foundational emphasis on personal connections and trust in business dealings, a trait that remains deeply ingrained in Filipino consumer behaviour today.

The Influence of Colonialism

The arrival of Spanish and later American colonial powers introduced new economic systems and consumer goods to the Philippines, marking the beginning of a shift toward a more globalised market. The colonial period saw the introduction of Western products and the gradual adoption of foreign consumption habits, blending with local traditions to create a unique consumer culture. This period also saw the rise of the “sari-sari” store, a small neighbourhood convenience store that embodies the Filipino spirit of community and resourcefulness. These stores, often run out of the front of a family home, became a staple of Filipino communities, providing local and imported goods.

Post-War Economic Growth and Modernisation

The post-World War II era brought significant economic changes and modernisation to the Philippines. The country’s economy began diversifying, moving from agriculture to manufacturing and services. 

This shift was accompanied by urbanisation and the growth of the middle class, leading to increased consumer spending and the introduction of modern retail formats, including supermarkets and department stores. However, even as Filipinos embraced these modern retail environments, the traditional values of trust, community, and personal connection played a crucial role in consumer behaviour.

The Digital Revolution and E-commerce

The advent of the internet and mobile technology has profoundly impacted Filipino consumerism. With over 85.16 million internet users in the Philippines in January 2023, the Philippines has experienced a digital revolution that has transformed purchasing habits. E-commerce platforms like Lazada and Shopee have become household names, offering the convenience of online shopping and a wide array of products at consumers’ fingertips. Social media has also become a significant factor in consumer decisions, with Filipinos spending more than 4 hours a day on social platforms, influencing everything from brand perceptions to purchase decisions. This also makes online market research in the Philippines very effective.

The Modern Filipino Consumer

A complex blend of tradition and globalisation characterises Filipino consumerism. The Philippines houses 3 of the world’s 10 largest shopping malls, and the strong mall culture coexists with a booming e-commerce market predicted to surpass $12 billion by 2025. Filipino consumers navigate a global marketplace while connecting deeply to local culture and values. Brands that succeed in this market understand the importance of emotional resonance, community engagement, and the blend of traditional and modern values that define Filipino consumerism.

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The Significance of Family Ties

Filipino society is tightly woven with family relations, where family extends beyond the immediate to include extended family members. This familial network profoundly influences consumer behaviour, shaping purchase decisions and preferences across generations.

The Role of Family in Purchase Decisions

The collective nature of Filipino families means buying decisions are often made with the family’s needs and preferences in mind rather than individual desires. This dynamic is evident in the popularity of big-bulk and family-pack products, which cater to sharing among family members. Whether it’s groceries, clothing, or electronics, the preference leans toward items that offer value for money and can be used or enjoyed by multiple family members.

Family-centric purchasing behaviour is also reflected in the Filipino custom of ‘pasalubong’ – bringing gifts home for family members after travelling. This practice underlines the importance of family in everyday life and showcases the thoughtfulness toward maintaining family bonds through shared experiences and gifts. 

How Filippino Parents and Grandparents Shape Buying Habits

Filipino families often feature strong, multigenerational households where parents, grandparents, and sometimes even great-grandparents play significant roles in shaping the family’s values and habits. This generational influence is a powerful factor in transmitting brand loyalties and purchasing habits. Brands trusted by a family over generations enjoy continued patronage, reflecting the deep-seated value of trust and tradition in Filipino consumer behaviour.

Parents and grandparents pass down preferences for certain brands or products and impart values that dictate how money should be spent. For example, emphasising education, health, and well-being often guides family spending toward educational materials, healthy food options, and medical insurance. The reverence for elders in Filipino culture means that products and services catering to the elderly, such as health supplements or mobility aids, are given special consideration in family budgets.

The influence of parents and grandparents also extends into the digital world. As digital natives, younger family members often introduce older generations to online shopping and digital payments, gradually influencing their acceptance and adoption of new technologies for purchasing. This intergenerational exchange enriches the family’s buying habits, blending traditional preferences with modern conveniences.

Products and services that can bridge generational preferences and cater to the collective needs of Filipino families are more likely to find success and longevity in this interconnected and family-oriented market.

Cultural and Social Factors

The Philippines exhibits consumer behaviour deeply influenced by social and cultural factors. 

‘Bayanihan’ and Community-Centric Purchases

‘Bayanihan,’ a term encapsulating the Filipino spirit of communal unity and cooperation, significantly influences consumer behaviour in the Philippines. There’s a strong inclination toward brands and products that contribute positively to local communities through job creation, environmental sustainability, or support for local artisans and producers.

The concept of ‘Bayanihan’ extends to consumer preferences for products and services that facilitate community gatherings and celebrations, such as food and beverages that can be shared during communal events.

Local Festivals and Seasonal Buying Patterns

The Philippines is renowned for its colourful and diverse festivals, known locally as ‘fiestas,’ which celebrate various religious and cultural events throughout the year. These festivals significantly impact consumer spending, driving seasonal buying patterns companies need to anticipate and cater to. During these times, there is a surge in demand for specific products, such as traditional foods, clothing, and decorations that align with the festival’s themes.

These festivals often stimulate local economies by encouraging spending on travel, accommodations, and souvenirs, reflecting the Filipinos’ love for celebration and their willingness to invest in creating memorable experiences. 

The Influence of Religion on Consumption

Religion, particularly Catholicism, which most Filipinos follow, significantly shapes consumption patterns. Religious observances and traditions, such as Holy Week and Christmas, dictate the timing and the nature of consumer purchases. For instance, there is a notable shift toward more modest consumption during Holy Week, with increased spending on religious items and charity. Conversely, the Christmas season sees a spike in consumer spending, with Filipinos buying gifts and decorations and preparing festive meals in the spirit of sharing and celebration.

The religious influence extends beyond these periods, with fiestas honouring patron saints in various locales yearly. These events are religious observances and community celebrations that stimulate spending on food, clothing, and festivities. 

Economic Considerations

The significant contributions of Overseas Filipino Workers (OFWs) and the growth of the middle class are noteworthy developments. 

The Impact of OFWs and Remittances

OFWs play a pivotal role in the Philippine economy, with their remittances constituting a significant portion of the country’s GDP. 

Remittances represent a lifeline for millions of Filipino families, supporting their daily needs, education, health care, and investments in small businesses and real estate.

The inflow of remittances has increased purchasing power among recipient families, influencing consumer behaviours from heightened spending on luxury goods and services to investments in education and property. The availability of this ‘extra’ income has also encouraged a consumer culture, as OFWs and their families often associate these attributes with social mobility and success.

Remittances have also contributed to the resilience of the Philippine economy, particularly during global economic downturns. The steady flow of funds from abroad has helped sustain domestic consumption even in times of crisis, buffering the economy against external shocks and maintaining consumer confidence.

Rising Middle Class and Its Effects on Consumer Behavior

The Philippines has witnessed significant economic growth for decades, contributing to the expansion of the middle class. The rising middle class is characterised by increased disposable income, changing lifestyles, and evolving consumption patterns.

-Iris Lorenzo, MD, Kadence International Philippines office

This demographic is also more engaged with digital platforms for information and commerce, driving the growth of e-commerce and online services. 

This segment’s influence extends to the housing market, with an increased demand for residential properties that offer security, amenities, and access to urban conveniences. The rising middle class is more likely to invest in education and health, prioritising the well-being and future of their families.

The Power of Digital and Social Media

Two phenomena stand out in the Philippines: the rise of online influencers and the importance of social proofing. 

Online influencers in the Philippines wield significant power over consumer preferences and purchase decisions. These influencers, ranging from celebrities to niche content creators, have cultivated loyal followings across platforms like YouTube, Instagram, and TikTok. They often serve as trendsetters and trusted sources of information for their audiences, offering recommendations and reviews that can sway purchasing decisions.

Ann Curtis Smith, Influencer & Multimedia Superstar

With 20 M followers and dubbed the “Multimedia Superstar,” Ann Curtis Smith remains the most-followed Filipino on Instagram.

Social proof has emerged as a powerful factor in the Filipino digital consumer journey, with social media platforms playing a pivotal role. Social proof, the psychological phenomenon where people assume the actions of others in an attempt to reflect correct behaviour for a given situation, is now amplified. Reviews, testimonials, and user-generated content on platforms like Facebook, Instagram, and YouTube serve as influential sources of social proof, guiding consumers in their purchasing decisions.

Brand Loyalty vs. Value Shopping

Understanding the dynamic between brand loyalty and the pursuit of value in the Filipino consumer market is crucial for brands aiming to engage Filipino consumers effectively, requiring a flexible approach that can appeal to both the heart and the wallet.

Are Filipinos More Brand Loyal, or Do They Prioritise Value?

Filipino consumers exhibit a complex relationship between brand loyalty and value shopping, often influenced by the type of product, the perceived value of the brand, and the economic context. On the one hand, Filipinos show a strong sense of brand loyalty, especially towards brands that have established a deep emotional connection or have been part of family traditions over generations. This loyalty is further reinforced by the quality, reliability, and status associated with certain brands, making them preferred choices despite cheaper alternatives.

However, pursuing value — getting the most out of every peso — is also deeply ingrained in the Filipino consumer psyche. The concept of “sulit” plays a significant role in purchase decisions, where a product’s quality, quantity, and price are carefully considered to ensure maximum value. 

The balance between brand loyalty and value shopping can also shift based on economic conditions. During economic uncertainty, for example, consumers may become more price-sensitive and open to switching brands in favour of better deals.

The Role of Promotions, Discounts, and ‘Suki’ (Regular) Incentives

Promotions, discounts, and the concept of ‘suki‘ — a term used to describe a loyal customer or patron — play crucial roles in reinforcing brand loyalty and encouraging value shopping among Filipinos. Retailers and brands leverage these strategies to attract and retain customers, offering tangible benefits for continued patronage.

The success of major online sales events, such as those offered by platforms like Lazada and Shopee, underscores the effectiveness of these strategies in the Philippine market.

The ‘suki‘ system embodies the relational aspect of Filipino commerce. Small businesses and local vendors often recognise and reward regular customers with discounts, extra goods, or more personalised services. For larger brands and retailers, loyalty programs that mimic the ‘suki‘ relationship by offering rewards, points, or exclusive benefits can effectively build and maintain a loyal customer base.

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Local vs. Global Brands

The Philippine market presents a fascinating battleground for local and global brands, each vying for consumer preference through cultural relevance, quality, and value. 

The Perceived Value of International Brands

International brands often hold a certain allure among Filipino consumers, attributed to their global reputation, perceived quality, and status symbol. For many, purchasing products from well-known international brands is about the prestige and lifestyle they represent, especially in categories like fashion, technology, and luxury goods.

The globalisation of consumer culture also reinforces the appeal of international brands, with Filipinos exposed to global trends through the internet and media. 

However, this does not imply that international brands always have the upper hand. Their success in the Philippine market depends on their ability to localise offerings and connect with Filipino values and preferences.

Trust and Reliability in Local Products

Local brands also command a significant place in the hearts and wallets of Filipino consumers, driven by a deep-seated trust and a sense of national pride. The success of local brands like Jollibee, which has outperformed global giants like McDonald’s in the Philippines, underscores the strong connection local brands can forge with consumers. This connection is often rooted in local brands’ understanding of Filipino tastes and preferences, enabling them to effectively tailor their products and marketing strategies.

The trust in local products is also bolstered by their perceived reliability and value for money. The preference for local products is further strengthened by the growing consumer awareness of the importance of supporting local businesses for economic development. There is a rising trend among Filipino consumers to patronise local brands as a way of contributing to the national economy and supporting local communities.

Sustainability and Ethical Purchasing

In recent years, the Philippines has seen a growing consciousness among consumers regarding sustainability and ethical purchasing. This shift reflects a broader global trend toward environmental responsibility and social equity, influencing purchasing decisions across various sectors of the economy. Let’s explore how these trends are manifesting in the Filipino market.

Are Eco-Friendly Products and Ethical Brands Making an Impact on Filipino Consumers?

Eco-friendly products and ethical brands are significantly impacting Filipino consumers, albeit gradually. As awareness about environmental issues and social injustices increases, more Filipinos are considering the broader implications of their purchasing choices. This awareness is partly driven by the visible effects of environmental degradation in the Philippines, such as pollution and natural disasters, which underscore the urgency of adopting sustainable practices.

Download our comprehensive report, “The Green Brand,” for insights into sustainable trends among consumers in ten countries.

Ethical brands prioritising environmental sustainability and social responsibility are gaining traction among a population segment that values transparency, sustainability, and ethical business practices. The rise of social media and digital platforms has further facilitated the spread of information regarding the importance of eco-friendly and ethically produced goods, amplifying their impact on consumer choices.

However, the overall market penetration of such products still faces challenges, including higher price points compared to conventional products and limited availability in some areas. 

The Growing Trend of Local, Organic, and Handmade Goods

Parallel to the rise of eco-friendly and ethical brands is the growing popularity of local, organic, and handmade goods in the Philippines. This trend is driven by a desire for healthier lifestyles, support for local economies, and a preference for products with a lower environmental footprint. Organic food products, in particular, have seen increased demand among Filipino consumers, who are becoming more health-conscious and concerned about using pesticides and synthetic fertilizers in conventional agriculture.

Handmade goods and artisanal products are also experiencing a resurgence as consumers value these items’ craftsmanship, uniqueness, and cultural significance. Purchasing handmade goods from local artisans is a way to support community livelihoods and preserve cultural practices.

The trend toward local, organic, and handmade goods is further bolstered by the growing number of farmers’ markets, organic farms, and community-supported agriculture (CSA) programs in the country. These initiatives provide direct channels for consumers to access fresh, locally sourced products while fostering a sense of community and connection to the food system.

Emotional Drivers and Aspirational Purchasing

Emotional drivers and aspirational purchasing are deeply rooted in the Philippines’ cultural and social dynamics, affecting how brands position themselves, and consumers respond to marketing campaigns. 

How Marketing Campaigns Tap into Filipino Emotions and Values

Marketing campaigns in the Philippines often succeed by resonating with the emotional and cultural values of the Filipino people. Brands that tap into feelings of family, community, and national pride tend to have a more significant impact, creating a deeper connection with their audience. Emotional marketing leverages storytelling, often featuring narratives that reflect everyday Filipino life, highlighting themes of love, resilience, joy, and the importance of family and social bonds. 

Filipino values such as ‘Bayanihan’ (communal unity), ‘Pakikisama’ (smooth interpersonal relationships), and ‘Utang na Loob’ (debt of gratitude) are powerful themes that brands integrate into their marketing strategies. 

The effectiveness of emotional marketing in the Philippines is also amplified by the widespread use of social media, allowing these resonant messages to be shared and amplified within communities, further strengthening the emotional ties between consumers and brands.

The Desire for Upward Mobility and How It Affects Consumer Choices

Aspirational purchasing is another significant factor driving consumer behaviour in the Philippines. The desire for upward mobility—a better lifestyle, higher status, and improved well-being—is a powerful motivator for many Filipinos. This aspiration influences purchasing decisions, from fashion and technology to education and real estate. 

Consumers are often drawn to brands and products perceived as symbols of success and progress to enhance their social standing. For instance, owning the latest smartphone or wearing popular fashion brands is seen not just as a matter of personal taste but as an indicator of one’s socioeconomic status. Similarly, investing in quality education for their children is a top priority for many Filipino families, viewing it as a key to unlocking better opportunities and securing a prosperous future.

Predictions for the Future of Filipino Consumer Behavior

Increased Demand for Personalised Experiences: As digital technology advances, Filipino consumers will increasingly expect personalised shopping experiences, tailored recommendations, and products that reflect their preferences and values.

Greater Emphasis on Sustainability: Environmental awareness and social responsibility will play a more significant role in shaping consumer preferences. Brands that can convincingly integrate sustainable practices into their operations and product lines will capture the attention of future consumers.

Continued Blend of Global and Local: While globalisation introduces international trends and products, a strong sense of national identity will keep local brands and traditions relevant. Successful brands will be those that can offer the best of both worlds, combining global appeal with local relevance.

Evolving Digital Landscapes: Adopting new technologies, such as augmented reality (AR), virtual reality (VR), and AI-driven shopping assistants, will further transform the Filipino consumer experience, offering new avenues for engagement and personalisation.

Resilience and Adaptability: The Filipino market’s history of resilience in the face of economic and social challenges suggests that consumers will continue to adapt to changing circumstances. Brands that are flexible and responsive to these changes offering solutions that meet evolving needs, will thrive.

The Philippine market presents ample opportunities for foreign direct investment, but companies that understand its unique socio-economic fabric will thrive.

With our global expertise in market research, we operate a dedicated office in the Philippines as a key partner for brands looking to understand and engage with the Filipino market. This presence on the ground provides an invaluable advantage, offering deep local insights and global perspectives. Our team in the Philippines specialises in harnessing a range of qualitative and quantitative research methods tailored to uncover the nuances of Filipino consumer behaviour, preferences, and trends. By leveraging its local expertise and global research capabilities, Kadence International is ideally equipped to steer organisations through the complex Filipino market, ensuring that strategies are informed, data-driven, and culturally attuned to meet this market’s unique needs and opportunities.

The Philippines is an archipelago in the western Pacific Ocean, consisting of around 7,641 islands. The country shares maritime borders with Taiwan to the north, Japan to the northeast, Palau to the east and southeast, Indonesia to the south, Malaysia to the southwest, Vietnam to the west, and China to the northwest. Its proximity to major Asian cities offers it a strategic point of entry into the ASEAN market and a gateway to international shipping for European and American companies. 

Economic development and Foreign Direct Investment

The Philippines is liberalising foreign investment laws to enable international companies to invest in the country’s robust economy and leverage its highly skilled labour market.

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The country’s economy grew by 5.7 percent in 2021, surpassing the government’s 5-5.5 percent target range, bringing the Philippines closer to its pre-pandemic 6.6 percent GDP from 2012-2019. 

The Philippines’ gross national income per capita was estimated at around USD 3,500 in 2021, below the World Bank’s upper middle-income range of $4,096 to $12,695.

According to reports, Philippine officials expect the country to achieve an upper middle-income status by 2023. 

Ease of restrictions increased consumption and improved employment. 

Net foreign direct investment (FDI) inflows rebounded after declining for three consecutive years and rose by 54 percent year-on-year to USD 10.5 billion in 2021. The U.S. is among the top investors in the Philippines. 

The top two import sources of the Philippines are China and Japan, with 22.7 percent and 9.4 percent import shares, respectively. The United States is the largest export market of the Philippines, with 15.9 percent of the total export value in 2021. It was followed by China, a very close second, which accounted for 15.5 percent.  

The Philippines has been named one of the most lucrative markets for foreign direct investment (FDI). 

With the twelfth largest population in the world, Filipinos are substantial consumers. Consumer spending in the Philippines reached its all-time high in the fourth quarter of 2018, and spending is predicted to keep increasing. The country has been named the 43rd biggest economy in the world and is a land of promise for domestic and international brands to invest.

A skilled workforce that is fluent in English 

The Philippines is known for its high proficiency in English and occupies the second spot for English proficiency in Asia. It ranked 18 out of 99 countries analyzed in the Index as of 2020. 

This is a great advantage for international companies entering the market and using local labour. 

The Philippines is considered a lucrative host for Foreign Direct Investment. Between 2016 and 2022, the Philippines Central Bank data showed that firms from China and Hong Kong invested USD 1.7 billion in the Philippines, trailing only Japan at USD 2.8 billion but ahead of the USA (USD 1.3 billion). 

The country is developing at a healthy growth rate and presents an immense opportunity for entrepreneurs, investors, and Filipino employees.

Many investment opportunities are available for entering the Philippines market, and now may be the best time for foreign brands to explore this emerging market. 

Some of the most lucrative industries for FDI in the Philippines include agriculture, manufacturing, tourism, business process outsourcing, energy, and infrastructure development.

There are various entry modes to choose from when investing in the Philippines. Companies entering the country can choose the most suitable one based on their business model and the laws governing each structure. 

1. Corporations 

A foreign company can establish itself as a corporation by registering a new legal entity with the Securities and Exchange Commission (SEC). In this structure, the owner’s individual assets are separate from the company’s. Corporations can be formed in two ways, a Filipino corporation with a minimum of 60 percent Filipino equity ownership or a foreign-owned domestic corporation with a foreign equity ownership greater than 40 percent. There are important distinctions between the two concerning land ownership and tax-incentive programs. Foreign-owned domestic corporations face the exact tax requirements as local corporations.

The process of setting up a corporation may be a complex one taking an average of 28 days. 

2. Branch Office

A branch office is a subsidiary of a foreign company that engages in the activities of its parent company in the Philippines. This is a profit-oriented structure used for business process outsourcing, such as call centres or back offices for multinational firms in the Philippines. These firms are popular in the Philippines due to low wages and many fluent English speakers. Setting up a branch office typically takes three to four weeks from the time of filing with the SEC.

3. Representative Office

A representative office is a liaison between the parent company and clients or partners in the Philippines and is not legally allowed to derive income. On average, setting up a representative office takes about three to four weeks from the date of application.

4. Regional H.Q.

Regional or Area Headquarters (RHQ) and Regional Operating Headquarters (ROHQ) are two types of regional headquarters. 

RHQs are non-income generating offices of a foreign enterprise, while ROHQ is an office of a multinational commonly used for back-office operations. The primary purpose of RHQs is to be a communication centre for subsidiaries, affiliates, and branches in the Asia Pacific region. 

The good news is that growth is seen in Manila’s metro city and other smaller provinces. The country’s improved infrastructure and growing population of consumers are attracting investments, both domestic and foreign, and creating better job opportunities. 

The Philippines’ economy is poised for growth, and the investment market is rife with opportunities, which makes it an excellent time to enter the country. 

Kadence International helps leading brands make game-changing decisions. From our base in Manila, we can conduct market research across the country. This means we can also be fieldwork partners, helping organisations reach respondents across the Philippines. Also, learn more about how to conduct market research in the Philippines.

If you are looking for a research partner to help better understand your customers, we would love to help. Fill out our Request for a Proposal here.