Real Estate vs. Stock Market: How Do Investments Compare in the Philippines?

The debate between real estate and stock market investing has intensified in the past five years, particularly in the Philippines. The COVID-19 pandemic, economic recovery, and shifting market dynamics have significantly influenced both asset classes, making it crucial for investors to understand how each has performed.

From 2020 to 2025, Philippine real estate and the Philippine Stock Exchange (PSE) have experienced contrasting trajectories. While real estate values remained resilient in key areas, the stock market has been more volatile, affected by global economic shifts and local policy changes.

Which asset class has performed better? And more importantly, which one offers the best potential moving forward?

Post-Pandemic Market Trends: Real Estate vs. Stocks (2020-2025)

Philippine Stock Market: Recovering from Volatility

The PSE Index (PSEi), which represents the performance of the Philippine stock market, has experienced a rollercoaster ride over the past five years:

•2020: The PSEi plunged due to pandemic-induced uncertainty, dropping to 4,623 points in March, its lowest level in over a decade.

•2021: A slow recovery was observed as restrictions eased, closing the year at 7,122 points—a 54% gain from the 2020 low.

•2022-2023: Persistent inflation and global recession fears caused further market swings, with the PSEi ranging between 6,000 to 7,000 points.

•2024-2025: The stock market stabilized, bolstered by economic reopening, higher consumer spending, and increased foreign direct investments. The index hovered between 6,700 to 7,300 points, reflecting cautious optimism.

While the stock market has shown strong short-term recovery potential, it remains highly sensitive to economic shocks, government policies, and interest rate movements.

Philippine Real Estate: Stability with Selective Growth

Unlike stocks, real estate has been relatively stable, particularly in prime locations like Metro Manila, Cebu, and Davao. However, market performance has varied by sector:

•Residential Real Estate: Despite early pandemic struggles, property values rebounded in 2021-2022, driven by pent-up demand, flexible payment schemes, and the return of OFW remittances. Luxury condominiums and house-and-lots in key urban areas have outperformed mid-range properties.

•Commercial Real Estate: The office sector suffered in 2020-2021 due to the work-from-home shift, but BPO expansions and hybrid work setups in 2023-2025 revitalized demand, particularly in Makati, BGC, and Ortigas.

• REITs (Real Estate Investment Trusts): Introduced in the Philippines in 2020, REITs have provided a bridge between real estate and stock investments, offering investors stable dividends and capital appreciation without property ownership.

While real estate offers long-term value appreciation, it requires higher capital and lower liquidity than stocks. However, its physical asset nature makes it less susceptible to daily market fluctuations.

Risk & Return: Which Offers Better Investment Potential?

1. Volatility & Stability

•Stock Market: Highly liquid but vulnerable to economic downturns and global market trends.

• Real Estate: Generally stable, though location and property type dictate performance.

2. Investment Accessibility

•Stock Market: Lower barrier to entry—investors can start with a few thousand pesos.

•Real Estate: Higher capital requirement, but financing options like bank loans and in-house financing make ownership more accessible.

3. Passive Income Potential

•Stock Market: Dividend-paying stocks and REITs provide passive income but are subject to company performance.

• Real Estate: Rental income provides consistent cash flow, but property management requires effort.

4. Inflation Hedge

•Stock Market: Inflation erodes purchasing power but may boost stock prices in some sectors.

•Real Estate: Historically a strong hedge against inflation, as property values and rental rates tend to rise over time.

The Role of REITs in Bridging Real Estate & Stocks

For investors looking to combine stock market liquidity with real estate’s stability, REITs have become an attractive alternative.

•REITs provide regular dividend payouts sourced from rental income, making them ideal for passive investors.

• Philippine REITs, such as Ayala REIT (AREIT) have provided annual yields of 5-6%, outperforming bank deposits and some fixed-income assets.

•REIT investments start at a few thousand pesos, allowing investors to participate in real estate without direct property ownership.

Final Verdict: Which Investment is Right for You?

There is no one-size-fits-all answer. The best investment depends on your risk tolerance, financial goals, and investment horizon.

• Choose Stocks if you prefer high liquidity, quick gains, and lower capital requirements but can tolerate market volatility.

• Choose Real Estate if you seek long-term value appreciation, passive income, and asset-backed security, despite higher upfront costs.

•Consider REITs if you want the best of both worlds—exposure to real estate’s stability with the ease of stock investing.

Investing Wisely in the Philippine Market

Both real estate and stock market investments have proven to be lucrative in different ways. The key is to align your investment choice with your financial capacity, goals, and risk appetite. By understanding market trends, you can make informed decisions that maximize returns while managing risks effectively.

For expert insights on real estate trends and investment opportunities in the Philippines, explore more at BuySellLease.ph