Post-COVID-19 prospects for Visayas residential hubs
Iloilo and Cebu continue to be among the most attractive property investment destinations in the Visayas.
A strong regional economic growth is seen to support further development of Iloilo and Cebu postpandemic, along with infrastructure development, which is crucial in raising property values in these two major property hubs in the Visayas.
Iloilo: Visayas’ rising star
Colliers Philippines believes that Iloilo will continue to rise as a viable residential investment location as commercial activities continue to increase in the province. It is among the preferred locations for outsourcing companies that are expanding outside Metro Manila. Office leasing recovery and sustained introduction of new supply are factors that will positively influence demand for condominium units. Sustained regional economic growth supported by massive infrastructure completion should further buoy end-user demand for horizontal projects.
In our view, an improvement in office leasing activities should help boost residential demand. In 2021, a total of 17,000 sqm of office transactions were recorded in Iloilo, a decline from the 28,000 sqm of office deals posted in 2020. Greater business activities within the city’s integrated communities should positively influence demand for condominiums located in the city’s townships.
Assess the product type to be launched
Colliers believes that developers should carefully assess the type of products to be offered in the market.
In 2021, studio units accounted for 59 percent of the total unit count in the projects launched, targeting investors rather than end-users. We believe this trend will continue as more investors buy with the intention of renting out their units to employees working in integrated communities. However, it would also be good to evaluate and address end-user demand by providing amply sized units.
Consider alternative sites for house-and-lot developments
While Iloilo City remains the primary site for both vertical and horizontal residential projects, we saw Oton, about 10 km west of Iloilo City, accounting for 59 percent of horizontal take-up in 2021. This should encourage developers to explore other areas in Iloilo for their next house-and-lot projects such as Sta. Barbara (where Iloilo International Airport is located), Oton and Pavia.
Retaining Cebu’s stature
Meanwhile, Colliers sees Metro Cebu recording a healthy demand from residential investors and end-users.
Hence, we expect developers to become relentless in landbanking and in completing projects beyond 2022. We also see residential developments benefitting from the completion of vital infrastructure projects around Metro Cebu.
Colliers believes that demand for condominium units will partly be driven by a recovery in office leasing especially within integrated communities and the opening up of borders for condominium projects positioned in the leisure market. Meanwhile, take-up for horizontal projects will be fueled by an improving economy, and sustained remittances from overseas Filipino workers (OFWs).
Colliers recommends that developers be proactive in assessing the gaps in the market for horizontal developments in terms of product and price, and in tapping the demand for mixed-use communities.
Tap demand for mixed-used communities
Colliers sees continued office space absorption outside Metro Manila.
In 2021, provincial transactions accounted for 19 percent of total office transactions in the country. In our view, residential demand in Cebu will be anchored by increased office leasing activities, along with improvement in consumer confidence and sustained OFW remittances.
In 2021, Cebu recorded the highest provincial deals at 38,600 sqm or 35 percent of total provincial office transactions. Colliers is optimistic that Cebu will remain on the radar of companies planning to occupy space outside the capital region.
The availability of Philippine Economic Zone Authority (Peza)-proclaimed office space should attract information technology-business process management (IT-BPM) locators and traditional firms to expand in Cebu. This should broaden the market for both vertical and horizontal developments.
Exciting times ahead for Cebu and Iloilo property markets.
