Cebu market deemed ‘practically developed’

CEBU, Philippines - Cebu's real estate industry remains robust across property segments, according to Pinnacle Real Estate Consulting Services Inc., describing the Cebu market as "practically developed".

"Metro Cebu, led by Cebu City, is the undisputed secondary center of the Philippines. In terms of cost of living and prices, the Cebu market is comparative to Metro Manila. In terms of education and culture, Cebu highly influences the Visayas and Mindanao islands," Pinnacle said in its 2016 3rd quarter market insight.

Pinnacle said the business process outsourcing (BPO) sector heavily drives the office market in Cebu.

There is a total of approximately 700,000 square meters of Grade A office spaces in Cebu while average rents are slightly higher than P500 per square meter per month, which is substantially lower than those of Makati and Bonifacio Global City (BGC) districts.

With its low rental rates, consistently growing economy, and large pool of talent, Cebu City proves itself a force to be reckoned with, not only within the Philippines' group of growing central business districts (CBDs), but also across the BPO industry worldwide.

Cebu still commands the lowest rental rate among Philippines' key business districts.

"Vacancy of office space is likewise a low 5 percent, keeping the rents stable," the property consultant further noted.

On the residential front, the Metro Cebu market has the highest number of condominium units outside of Metro Manila totaling to over 20,000 units, according to Pinnacle.

It noted that an average of 5,000 units will be delivered in the next couple of years.

"Average selling prices are north of P90,000 per square meter. The rental market is also well developed given the healthy population of local executives and expatriates," Pinnacle said.

Furthermore, the retail market is likewise deemed robust led by homegrown retailers, the Gaisano groups, and national players such as SM, Ayala and Robinsons.

"Total commercial-retail spaces recently breached the one million-square meter mark with steady completion of the sprawling SM Seaside Cebu. Like the pattern in Metro Manila, retailers are developing various platforms of retail stores and shops," Pinnacle also noted.

In the hospitality sector, Pinnacle observed that hotel developments, both local and international brands, are likewise prolific in Metro Cebu.

The industrial sector also is very healthy. In fact, the industrial zones in Metro Cebu were filled up well ahead of their counterparts in Luzon.

"The Cebu market is practically developed, and some would even say bursting to the seams. If a new real estate player would come in, proper due diligence is instructive as the competition would be very stiff," it said.

In general, Pinnacle sees continued growth in the Philippine economy and the real estate market, as the present administration targets to disperse spending and development in the provinces. 

Ensuring attractiveness to investors, it noted, is another key policy of the administration. Businessmen are already anticipating positive news on the Real Estate Investment Trust (REIT) Law's revenue regulations and incentives provided by state agencies.

The government is also looking to address the bottlenecks in land administration and management system. (FREEMAN)