Colliers Philippines data show that Cebu dominated in terms of office space take-up outside Metro Manila in 2023.
(First of two parts)
A constant challenge for developers is to look for feasible property investment hubs outside Metro Manila.
Land values in the capital region are constantly increasing, making it difficult for developers to launch affordable to lower mid-income residential projects. The cost of completing projects in Metro Manila has also increased due to rising prices of construction materials and elevated interest rates. Property developers further face tepid reception for their pre-selling projects in the capital region, so the challenge is to scout for areas that could provide growth outside Metro Manila.
At Colliers, we are constantly in touch with developers looking for viable expansion sites outside Metro Manila. When they ask where to invest next, three locations appear as topmost considerations. These are Cebu, Cavite, and Laguna.
These three locations are part of Southern Luzon and Central Visayas, two of the most dynamic and fastest growing regions in the Philippines. Latest official data show that Central Visayas’ economy grew by 7.6 percent in 2022 while the Calabarzon region’s economic output expanded by 7.8 percent in the same year—almost the same pace or even slightly faster than the Philippine economy’s 7.6 percent growth in 2022.
What’s notable is that key economic sectors such as construction, services, and manufacturing continue to fuel the regions’ economic expansion. With the Philippines recording the fastest economic growth in Southeast Asia in 2023, we only see Cebu, Cavite, Laguna becoming even more dynamic, clocking in greater contribution to the economies of Central Visayas and Calabarzon for the remainder of the year.
There’s no question that the vertical and horizontal residential markets in Cebu continue to thrive.
Continued optimism in Cebu’s office, residential sectors
Colliers Philippines data show that Cebu dominated in terms of office space take-up outside Metro Manila in 2023.
However, despite the strong net take-up, vacancies remain elevated due to new supply that we see persisting for the remainder of 2024. Colliers still expects a tenant-leaning market for Cebu, and this should provide an opportunity for tenants to take advantage of the presence of better quality office buildings, skilled and young labor pool, improved infrastructure, and ease of doing business.
In our view, what office landlords in Cebu need to do is to remain proactive in improving their occupancy and developing higher quality buildings to address the demands of tenants who have become more discerning. More and more tenants in Cebu are looking for “healthy” and “sustainable” office buildings and they are factoring these into their selection criteria when they scout for office spaces to lease out.
While Metro Cebu is already popular for high value outsourcing jobs, other cities such as Iloilo, Bacolod, Davao, and Clark are also seen catering to the demand. Cebu must thus sustain its attractiveness. Infrastructure developments, along with a business-friendly environment, competitive market, and upskilled workers, will be crucial for Cebu to remain on the radar of business process outsourcing (BPO) locators.
Colliers further believes that the growth of outsourcing investments in Cebu should potentially raise residential demand especially for BPO employees who comprise a viable market for affordable to mid-income residential segments. The return of more expatriates should likewise help raise take-up for condominium units for rent especially in Cebu’s business and IT parks.
Cebu is the largest condominium hub outside Metro Manila.
Cebu’s residential prices to rise
Cebu is the largest condominium hub outside Metro Manila.
There’s no question that the vertical and horizontal residential markets in Cebu continue to thrive. From 2024 to 2028, Colliers expects condominium prices in Cebu to constantly rise as property firms test the market for more upscale and luxury projects (P12 million and above). In 2023, these segments accounted for about 30 percent of total condominium launches in Cebu from only 8 percent in 2022.
Colliers believes that prices of condominium units in Cebu are likely to increase, especially given our projected slowdown in completion from 2024 to 2025. Prices in the secondary market are likely to increase due primarily to demand from investors banking on upscale and luxury projects’ price appreciation potential.
(To be continued) Colliers Philippines data show that Cebu dominated in terms of office space take-up outside Metro Manila in 2023. There’s no question that the vertical and horizontal residential markets in Cebu continue to thrive. Cebu is the largest condominium hub outside Metro Manila.