Cebu emerges as key market in real estate’s critical phase

CEBU, Philippines — The Philippine real estate sector is heading into 2026 facing a familiar mix of headwinds and opportunities, with Cebu emerging as one of the country’s most resilient growth markets, according to the latest outlook from Colliers.

The property consultancy firm said the industry is entering a “critical phase” where adaptability, diversification, and investments in emerging regional hubs—particularly Cebu—will define which developers stay ahead in an increasingly competitive landscape.

Office: Decentralization Push Puts Cebu in Strong Position

Colliers expects the national office market to gradually recover next year, supported by improving take-up from IT-BPM firms and traditional occupiers.

While new supply across Metro Manila is forecast to slow to 350,000 square meters annually from 2026 to 2028, Cebu is poised to capture a bigger share of expansion as companies push business continuity strategies and diversify outside the capital.

Flexible workspace operators are expanding most aggressively in Cebu, Pampanga, and Iloilo—an unmistakable sign, Colliers said, that decentralization is accelerating. This trend is expected to sustain demand for prime office developments in Cebu’s business districts, where developers are rolling out tech-enabled workspaces and hybrid-ready designs.

Residential: Buyers Hold the Upper Hand but Cebu Demand Steady

Nationwide, the condominium sector remains a buyer’s market, weighed down by more than 30,000 ready-for-occupancy units in Metro Manila alone. Developers are responding with promos and stretched payment schemes, especially for mid-income units.

While oversupply is concentrated in the capital, Cebu continues to post relatively healthy absorption due to sustained demand from OFWs, local investors, and the IT-BPM workforce. Fringe districts in Metro Manila such as the C5 Corridor mirror Cebu’s own expansion pockets such as Mandaue and South Road Properties (SRP), where take-up for selected projects remains robust.

Industrial: Regional Growth Corridors Highlight Opportunities for Cebu

Central Luzon is set to dominate industrial development with 870 hectares of incoming supply between 2026 and 2028—four times that of Southern Luzon. But Cebu remains a strategic industrial hub in the Visayas, supported by logistics demand, port access, and proximity to manufacturing zones.

Colliers said developers nationwide are likely to accelerate PEZA-accredited facilities and modern warehouse construction following the passage of the 99-year land lease law, with Cebu expected to attract firms seeking strategic mid-country distribution centers.

Hotels: Cebu Tourism and MICE Activity Add Tailwinds

The hotel sector will see more than 3,000 new rooms come online in 2026, the largest annual supply increase since 2018. While Metro Manila leads the pipeline, Cebu remains one of the country’s strongest tourism markets, driven by domestic leisure travel and a substantial rebound in MICE activity.

The return of large conventions in Cebu City and Lapu-Lapu City is expected to lift occupancy rates, even as foreign arrivals from South Korea and China remain soft.

Retail: Cebu Among Key Expansion Targets as Vacancy Falls

Retail property performance continues to firm up, with Metro Manila's vacancy rate expected to slip below 10 percent by end-2026. Developers are increasingly steering expansion outside the capital, with Cebu—alongside Bacolod and Davao—emerging as a priority market for new malls, lifestyle centers, and foreign retail entrants.

Annual retail completions are projected to average 111,000 square meters from 2026 to 2028. Colliers advises landlords to lean into experiential concepts and refreshed tenancy curation to stay competitive, especially in major urban centers like Cebu.

Adaptability Is Key

“2026 will test the resilience of Philippine real estate players,” said Joey Roi Bondoc, Director and Head of Research at Colliers. “Future-proofing strategies—from embracing flexible workspaces and suburban expansion to leveraging industrial growth and retail innovation—will be critical for developers aiming to thrive in this cyclical market.”

With Cebu continuing to outpace many regional peers in office absorption, tourism recovery, and retail expansion, Colliers said the province is positioned to remain a bright spot as the property sector navigates another cycle of shifting market forces. — (FREEMAN)