(First of two parts)
Over the years, Colliers has seen the proliferation of more office and residential hubs outside Metro Manila.
In our view, this bodes well for the Philippine economy. As more economic centers rise, it means that development is spreading outside Metro Manila. At the same time, it indicates that the property sector’s growth is broad-based and not just focused on a single location.
Decentralization thrust
Undeniably, Metro Manila remains a major investment destination, but developers are also setting their sights on other urban areas. This decentralization thrust is likely to be supported by the continued implementation of key infrastructure projects, including airports, bus rapid transits, cargo and passenger railways, outside Metro Manila.
Overall, the country’s infrastructure push should guide the expansion plans of developers across the country. These public projects have not only provided access to properties that could be redeveloped into mixed commercial, residential, hotel/leisure and industrial estates, but have also helped the government bring economic opportunities in areas outside the country’s capital.
Due to road projects, for instance, business opportunities have spilled over to nearby areas such as Cavite, Laguna, Bulacan, Tarlac, and Pampanga in Luzon. In Visayas, Cebu remains the primary property investment hub, but other locations are starting to catch up, with the likes of Iloilo and Bacolod cornering substantial investments from national and homegrown developers. In Mindanao, Davao remains the most attractive property investment destination.
Colliers Philippines believes that developers will continue to venture into residential projects in second-tier and third-tier cities all over the country, where demand comes from “end-user” buyers. These markets may be smaller compared to Metro Manila, but are more stable in terms of demand.
With a thriving property landscape postpandemic, Colliers also projects the continued development of more offices, malls, hotels, and industrial parks outside the capital region. Moving forward, we see local government units competing for more investments and this competitive landscape should result in a more diverse Philippine property market, benefiting investors and end-users.
Postpandemic Ceboom
Cebu remains one of the most attractive and largest residential hubs outside Metro Manila, owing partly to its improving infrastructure. The recently completed Cebu–Cordova Link Expressway should raise the attractiveness of fringe locations such as Talisay, Liloan and Consolacion for residential developments. Other upcoming projects include the Metro Cebu Expressway and Cebu Bus Rapid Transit, both of which are due for completion in 2025.
Over the years, Colliers has also started to see the proliferation of upscale to luxury condominium units in major residential hubs outside the metro, especially in Metro Cebu. Demand for such projects is expected to be partly sustained by the recovery of the tourism sector which should propel the renewed interest for leisure-oriented properties.
The launch of higher-priced condominium units even outside Cebu City such as Mandaue further indicates the national property firms’ confidence in Cebuano investors’ purchasing power and rising affluence.
Davao: Mindanao’s major property hub
Colliers Philippines believes that the entry of national players in Davao has paved the way for substantial development of integrated communities. Hence, developers should continue with their landbanking initiatives and capitalize on the city’s improving infrastructure backbone.
The national government has lined up vital infrastructure projects in the city which, once completed, should further solidify the city’s attractiveness as a residential investment hub. These include the Davao Coastal Road, Davao City Bypass and the expansion of Davao Airport.
Residential developers should further test the market and even diversify, especially with the rising viability of upscale and luxury projects among investors and end-users. In our view, Davao’s competitiveness and stature as an outsourcing hub in Mindanao, backed by regional economic growth, should retain the city’s attractiveness for more residential projects.
Bacolod: A property sweet spot
Bacolod City is attracting national players and we see this resulting in the development of more township developments and a further expansion of the city’s residential stock. Their entry is also raising the prices of vertical projects, indicative of their confidence in the purchasing power of Bacolod City’s investors and end-users.
Developers should further assess Bacolod market’s reception for luxury projects, especially in light of newly launched residential towers by national developers.
Bacolod should also benefit from the upcoming Panay-Guimaras-Negros Link Bridge. Construction for the project will begin in 2025.
Iloilo rising
Iloilo’s thriving business landscape is partly buoyed by a continuously expanding outsourcing sector which continues to attract national developers to launch more residential projects in the city. While residential condominium developments are concentrated in Mandurriao, Iloilo’s main business district, some developers are beginning to explore other areas that are ripe for upscale and luxury residential developments.
National players should thus take advantage of the city’s growing investor and end-user market, as well as maximize their projects’ proximity to infrastructure. Major public projects in the city include the Ungka II Flyover which will traverse Pavia, Hibao-an and Buhang, and will cut travel time from Iloilo City to Iloilo International Airport to 20 minutes.
Iloilo is also one of the most competitive cities in the Philippines given its skilled workforce and quality infrastructure. Hence, we see Iloilo attracting major local and foreign investments in the near to medium term.
(To be continued)