Seizing opportunities: Cebu residential developers, investors bank on post-COVID-19 rebound

In my last column, I noted that the Philippine property market is bound for rebound. The economy is growing after contracting in 2020 and indicators point to a faster expansion this year.

We believe that among the beneficiaries of this strong GDP growth is Cebu, which is regarded as the largest condominium hub outside Metro Manila, and one of the most competitive cities in the Philippines. Cebu also has a potential for a stronger regional growth this year, supported by an improving infrastructure network and sustained remittances from Cebuanos working abroad.

Colliers Philippines sees Cebu recording a healthy demand from residential investors and end-users beyond 2022. Hence, we expect developers to become relentless in landbanking and in completing projects. We also see residential developments benefitting from the completion of vital infrastructure projects.

In our view, the 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.

Cebu will definitely benefit from the much-anticipated rebound of the tourism sector.

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. Developers should remain strategic with their landbanking initiatives.

Mixed-used communities. Leisure-centric projects

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. Cebu recorded the highest provincial deals in 2021 with 38,600 sqm of transactions or 35 percent of total provincial office transactions.

Colliers encourages developers to respond to the potential demand for mixed-used communities, which feature office towers, residential condominiums, malls and institutional facilities.

Colliers sees the completion of major infrastructure projects including Metro Cebu Expressway and Cebu Cordova Link Expressway boosting the attractiveness of condominium projects in integrated communities in Metro Cebu due to rental prospects and potential for price appreciation. The expansion of the Cebu Airport also buoyed the demand for residential units in the Mactan area.

Supply up 15%

Colliers recorded the completion of 6,627 new condominium units in 2021, a 15 percent increase from the 5,762 units delivered in 2020. Colliers sees the completion of 6,500 units per year from 2022 to 2024, higher compared to the annual delivery of 5,100 units from 2017 to 2019. Cebu City, Mandaue City and Lapu-Lapu City should account for 99 percent of new supply during the period.

Residential take up

Colliers believes that recovery in residential demand will be anchored by an improvement in consumer confidence and sustained overseas Filipino workers’ (OFW) remittances.

In our view, the increase in office space absorption should also buoy demand in Cebu’s residential market. 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.

Cebu’s residential sector holds a lot of promise postpandemic. Both developers and investors can’t wait to seize the opportunities.

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