CEBU AND GIANT NAT’L DEVELOPERS
As the Cebu real estate market becomes more fiercely competitive, property research and management firm Colliers International is encouraging national players to be more aggressive in pursuing the development of mixed-use communities.
Colliers said it expects developers to continue pursuing mixed-use communities in Metro Cebu, believing that township projects, which integrate the live-work-play lifestyle, provide a better value proposition than stand-alone projects since they offer mixed-use developments such as office, residential, retail, and even institutional.
“The master-planned environment continues to set national developers apart from local players,” the firm said in its recently released report titled “When Giants Invade: National Property Developers Redefining Cebu.”
The need to develop mixed-use communities was among the recommendations laid down by the research firm for national players to continue thriving in Cebu, along with differentiating integrated projects; expanding presence into the hospitality and industrial sectors; partnering with local developers; maximizing brand equity; and acquiring reclaimed land.
“The entry and aggressive expansion of national developers have redefined the Cebu property landscape,” Colliers Philippines said.
Colliers said that integrated townships have become more popular in Cebu given the inadequate transport infrastructure in traditional business districts, both in the uptown and downtown areas.
Furthermore, national developers were successful in developing townships in Metro Manila and have applied the same concept in Cebu.
“The developers are bridging infrastructure gaps and unlocking opportunities by building master-planned communities that have the potential to become major catchment areas for business activities in Cebu,” Colliers said.
Megaworld is replicating its successful Eastwood City, the first PEZA-accredited IT Park with Mactan Newtown; Ayala Land created a more contained version of the Makati Central Business District through Cebu Business Park and Cebu IT Park; while Filinvest Land is developing City di Mare, which is being positioned as the integrated lifestyle hub of Cebu.
Colliers said it believes mixed-use projects will also become more attractive from now on, especially as Cebu tries to retain its status as the second largest outsourcing hub in the country as well as one of the most attractive BPO destinations in the world.
“We see more BPO tenants in Cebu shifting toward these mixed-use communities as these projects offer a better living and working environment,” Colliers said.
The Duterte administration’s thrust to ramp up infrastructure spending to 5 to 6 percent of the annual gross domestic product should greatly benefit Cebu, Colliers said.
Colliers added that the current administration’s goal of spreading economic opportunities and intensifying infrastructure development outside Metro Manila should provide impetus for national developers to be more aggressive in pursuing mixed-use projects in Cebu.
“Given the rising popularity of integrated townships, we see national developers actively acquiring large parcels of land in Cebu that could be developed into master-planned communities,” it said in its report.
Furthermore, the firm said it believes that in the increasingly competitive real estate environment, developers need to distinguish their projects from others.
Colliers said it sees competition intensifying especially with the completion of projects on Mactan Island, Mandaue and South Road Properties (SRP).
Apart from the typical land uses such as office, residential, retail, and hotel, developers should also incorporate other uses such as industrial, education and healthcare. We believe that developers should also integrate entertainment and recreational facilities for outdoor sports, Colliers added.
The firm also stressed that major players’ development of mixed-use communities should be complemented by hotel and industrial facilities as tourist arrivals and manufacturing activities in Cebu have been gaining traction, and national developers should zero in on these opportunities.
National developers should also firm up partnerships with local developers to strategically expand their land bank.
“Tie-ups with local developers also enable national firms to leverage on the former’s familiarity with Cebu and its residents. This should allow national developers to customize their real estate offerings based on the local investors’ and end-users’ preferences,” Colliers pointed out.
Examples of these partnerships include Ayala’s joint venture with Aboitiz Land for Gatewalk Central in Mandaue, and Taft Properties and regional developer Hong Kong Land’s joint development of the 20-hectare mixed-use project Mandani Bay.
Among the “giants” Colliers included in its report are Ayala Land, Federal Land, Filinvest Land, Rockwell Land, Robinsons Land, Megaworld, SM Prime, and Vista Land.
The research firm said that over the past few years, it has observed the transformation of Cebu’s skyline with large-scale residential, commercial, retail, and hotel developments.
Colliers pointed out that the property boom in Cebu offers an alternative metropolitan-paced business lifestyle at a discount to Metro Manila.
Its real estate sector is particularly unique as it is actively participated in by both local and national developers, Colliers added.
According to Colliers, Cebu is recognized as the premier investment destination outside of the country’s capital and has undergone significant transformation in the last decade.
“We see Cebu’s contribution to the country’s economic output surging over the next five to ten years given its rising attractiveness as an investment hub and the development of crucial air and road infrastructure projects which should significantly bring down the cost of doing business in the region,” the research firm said.
Researchers at Colliers said they also see Cebu benefiting from the Duterte administration’s decentralization thrust or the spread of economic opportunities outside Metro Manila.
At present, business activity in Cebu is primarily driven by several major factors.
One is the expansion of outsourcing firms which currently employ 130,000 workers and contribute one-tenth of national industry revenues.
There is also a growing demand for horizontal and vertical residential developments, driven by strong OFW remittances and burgeoning local and foreign businesses.
Colliers also cited a sustained influx of local and foreign tourists effectively expanding Cebu’s consumer base and hotel occupancy.
Lastly, the research firm said strong manufacturing and export sectors also drive the region’s industrial growth.
“Given these demand drivers, property values in Cebu have been on an upswing,” it said.
According to Colliers research, there are now 56,028 horizontal residential units in Cebu, 48,122 vertical residential units; 1,316,544 square meters of net saleable area for the office sector; and 1,252,496 sqm. in gross leasable area for retail.