CEBU, Philippines — Cebu's real estate sector is showing no signs of slowing down, property consultant Santos Knight Frank says, as investments continue to come in, driven by its healthy economic fundamentals.
In a press briefing yesterday, company CEO Rick Santos said the growth of Cebu’s property sector this year solidifies the metropolis’ position as the leading investment destination in the Philippines outside the capital.
"With a strong economy, large pool of talent and new infrastructure in place, Cebu is well on its way to becoming a global city," Santos told the briefing at Radisson Blu Cebu.
He said: “The launch of Mactan-Cebu International Airport’s Terminal 2 is a particularly exciting development. While a number of cross-border transactions have recently been closed in Cebu, in particular from China, South Korea and Japan, the improvements tothe airport will further increase tourism, facilitate greater inflow of capital and help continue the metropolis’ growth momentum in the coming years.”
Santos Knight Frank particularly sees a robust growth in the Cebu office market in the next three years.
The property consultancy firm is projecting a 47 percent growth in office supply between 2018 and 2020 and the BPO (business process outsourcing) industry is seen to remain a key driver for office space demand in Cebu.
Metro Cebu’s real estate market will see a leap in office stock with as much as 350,000 square meters (gross leasable area) in next three years.
Representing 47 percent of the existing supply in Cebu, the growth reveals the long-term positive outlook of developers amid healthy demand for office space by multinational companies and BPO firms, the real estate service provider noted.
During the first half of the year, Cebu continued to see new investments enter its booming property sector, driven by a strong local economy, presence of skilled labor force, affordable office lease rates and enhanced international connectivity with the launch of MCIA Terminal 2.
In the office market, weighted average asking lease rates increased by about 2 percent to P548.31 during the first half from P536.96 in second half of 2017.
Done deals tracked by Santos Knight Frank were recorded with transacted rents of P600 to P650 per square meter – a 9 percent increase from last year’s transacted rents.
Meanwhile, office capital values typically range from P150,000 to 200,000 per square meter.
Joey Radovan, vice chairman and head of occupier services and commercial agency, said: “By 2020, the greater Cebu business districts will have close to 1 million sqm of total space serving the office market. The IT-BPO industry will continue to drive commercial demand and traditional office operations will have the opportunity to upgrade to new, modern buildings for their front office needs.”
Migration to Cebu from other Visayas provinces has been key in driving demand across all real estate sectors.
As the Cebu real estate market continues to grow, other real estate market players are setting up in the fringes of the city and other areas within the Visayas region, building more competition and facilitating growth in secondary areas.
With the presence of employment opportunities in other provinces of Visayas, it is possible for the Cebu migration to decrease.
Iloilo and Bacolod are two destinations exhibiting increasing commercial and development activities, particularly the Iloilo Business Park, Bacolod Capital Corporate Center and Bacolod Capital Central Mall.