Provincial cities on the rise

The Philippine real estate sector seems to show no signs of slowing down, as prospects remain just as promising as it was in recent years.

While much of the industry’s growth centered on Metro Manila and key provincial cities, there has been a gradual shift towards the provinces in recent years, boosted primarily by the government’s ambitious P8-trillion Build, Build, Build infrastructure initiative and decentralization thrust. Key infrastructure projects—new highways, widened roads, bridges, airports, among others—have started to unlock land values in the provinces, enticing many businesses, including property developers to bet big on these areas such as Iloilo, Bacolod and Palawan, among others.

Today, even the biggest names in the local real estate sector are going out of their way to tap what is seemingly a huge market potential offered by the provinces, bringing their expertise to put up high-rise residential condominiums, Grade A office spaces for multinationals that might want to set up shop outside Metro Manila, and even contemporary commercial spaces that offer unique lifestyle concepts to the residents.

In Bacolod, for instance, demand and supply for the condominium segment, while still in its early stages, are seen to rise once various township projects are completed. According to Colliers International Philippines, house and lots remained the main growth driver, buoyed primarily by demand from overseas Filipino workers (OFWs).

“Bacolod’s house-and-lot stock reached 17,660 units as of the end of 2018…On the other hand, Bacolod City’s condominium segment is still in its early stage, with stock reaching only 1,308 as of the end of 2018. This is much smaller than Metro Manila’s 111,000 units and Metro Cebu’s 38,800 units,” Colliers said in a report dated May 9.

Bacolod’s office sector meanwhile has seen a growing interest from outsourcing firms. A Colliers report noted that despite the addition of 11,000 sqm of new supply, vacancy here remains low as the new space was already taken up by an outsourcing company. Colliers expects Bacolod City’s office supply to reach 161,300 sqm by 2021, up 36 percent compared to its 2018 stock.

Bacolod City has also remained a major retail hub in Visayas with national mall developers either completing or planning new projects over the next two to three years. Food and beverage (F&B) and foreign clothing brands are seen to drive occupancy in new malls.

In Iloilo City, the “continued influx of outsourcing companies, deployment of OFWs and expansion of non-outsourcing sectors such as insurance and finance, have propelled demand for vertical and horizontal residential projects in the city. Local residents have also started acquiring condominium units as an alternative investment option,” a May 9 Colliers report stated.

Its office property market holds much promise as well as Iloilo City continues to attract major occupants such as call centers and legal transcription service providers. Colliers expects the completion of about 133,450 sqm (1.4 million sq ft) of new supply from 2019 to 2021 or about 44,500 sqm (478,800 sq ft) annually, all of which are likely to be in the Mandurriao area.

Greater retail space absorption in the Mandurriao area, especially in the Iloilo Business Park, is also expected over the short-term, as it benefits from the office towers and hotels within this business district. Colliers said it expects demand from food and beverage (F&B) and clothing and footwear firms sustaining an annual take-up of about 11,400 sqm a year from 2019 to 2021.

“We encourage retailers to continue to look for available space in key malls in the business districts where there is sustained consumer traffic. Malls developed within Mandurriao especially in township projects developed by Megaworld, SM and Ayala Land continue to record strong consumer traffic. Tenants should also explore acquiring retail space in malls near the thriving residential communities outside of Mandurriao such as Pavia, Savannah, and Jaro,” Colliers said.

Over in Palawan, the inauguration of a new airport in San Vicente last year was seen to boost the tourism potential of the province, where many developers have likewise started to put up new hotels and resorts in anticipation of an arrival boom. More farm-to-market roads were built over the past few years while a P30-billion road-widening project was earlier proposed by the Department of Public Works and Highways (DPWH). The said project sought to expand to six lanes an existing two-lane national highway spanning some 600 kilometers across Palawan.

If the government is, indeed, able to roll out all the proposed infrastructure projects in its pipeline, it won’t be long until the country sees the rise of other provincial cities and municipalities, holding much potential for further growth and expansion.