Infra investments: Mandaue’s economic booster

Infrastructure projects to spur property development in this ‘gateway city’ to Cebu

Mandaue City is already a favorable destination for investors as it is, with proximity to the Mactan-Cebu International Airport and Cebu International Port being one of its biggest selling points.

Known as the “gateway” to the rest of Cebu, Mandaue is poised for greater economic growth in the coming years with ongoing and upcoming projects that will change the economic landscape of this highly-urbanized city.

The city is also seen to greatly benefit from the burgeoning real estate sector in the Philippines, especially with the expected completion of two big-ticket projects in the area by 2020 — Gatewalk Central and Mandani Bay.

According to Lindsay Orr, chairman of real estate and investment management firm JLL Philippines, improvements in infrastructure will be a huge factor in further spurring property development in Mandaue as well as the rest of Cebu.

“Infrastructure will stimulate property development, the more you put in. As you know, there is already a big decentralization push under the Duterte administration and a push on infrastructure as well, which will surely help,” he said during a recent forum in Mandaue City.

The Department of Public Works and Highways (DPWH) earlier announced the construction of the P50-billion Metro Cebu Expressway, which will connect Naga City in the south to Danao City in the north.

Orr said these projects had been seen to boost Mandaue City’s potential as a central business district, particularly in the office and retail segments.

He added that it is also going to strengthen the demand for mid-range and luxury condominium units in established and future townships.

Furthermore, he said this will also help solidify Mandaue City’s presence as the industrial hub of Central Visayas as well as attract more international and local hotel developers with the growing number of tourist arrivals.

Institutional infrastructure, tourism

While much of property development will be anchored on these projects, Orr pointed out the need to develop institutional infrastructure as well, with focus on schools and health services as a priority.

Investments in information and communication technology facilities, particularly meant to improve broadband Internet speeds, are also important, he added.

Strong business support from the local government, which the private sector already benefits from, is also an incentive for locators to invest in Mandaue City.

As a tourist destination, Orr said it is imperative for the local government to promote and preserve natural areas and historical locations, stressing that celebrations and fiestas will entice more people to visit the city.

There is a close working relationship between the government and the Mandaue Chamber of Commerce and Industry (MCCI) in terms of policymaking and investment promotion, making the city very business-friendly.

Orr said the city’s new zoning and classification program also makes it easier for investors to locate, with the city divided into five planned unit development zones (PUDZ) to ease planning and designing.

Under the program, the city is segmented into central business district; light industrial park; mixed-use development including residential and commercial; land reclamation for recreation and tourism; as well as medium-to high-intensity industrial development with priority for high-value manufacturing.

Around 40 percent of Cebu’s export companies are in Mandaue and from a real estate perspective, it has one of the lowest real property taxes in the country, which makes it one major incentive for investors, Orr said.

Development models

Among the developments Mandaue City can take a cue from are Bonifacio Global City (BGC) and the Makati central business district (CBD).
In 2003, properties in BGC and Makati CBD only cost P100,000 and P200,000 per sq.m., respectively, but have grown to P500,000 and P575,000 per sq.m., respectively, in 2016.

More than 14 years ago, BGC was only a home to 24 buildings but is now 60 percent filled up with 200 buildings. In the next five years, the number is seen to grow to 250 buildings.

Land prices at the 27-hectare Cebu IT Park in 2003 was only at P15,000 per sq.m. and has increased by over five times to P80,000 per sq.m. in 2016.

Around 70 percent of Cebu’s BPO industry is located at the Cebu IT Park, which has become an address of choice for many multinational companies and industry leaders.

Offshore and outsourcing services have been the main drivers of demand for office spaces in the last 15 years, with 80 percent of the country’s office take-up committed to the business process outsourcing industry.

The office market remains strong in the Philippine with lower rental and attrition rates as well as an educated labor force.

According to JLL, Cebu’s office market has a current supply of 893,000 sq.m. and a future supply of 366,000 sq.m. in the next four years.

Office rental rates in Mandaue are still relatively low at P435 to P650 per sq. m., signifying that there are still great opportunities for growth further down the line.

Developments to watch out for in Mandaue include the Gatewalk Central offices expected to be completed in 2020 as well as the Mandani Bay office tower.

Retail continues to be driven by strong consumer spending and consumer confidence.

Cebu currently has 1.1 million sq.m. of retail space with 200,000 sq.m. set to be added to the inventory in the next two years or so, Orr said, driven by cheaper rents and the entry of foreign brands.

Retail rates in Mandaue City range from P500 to P650 per sq.m. with still enough room to grow.

Meanwhile, Orr said he sees a big demand coming for family accommodations brought about by the increasing tourism arrivals in Cebu as well as in Mandaue.

Cebu currently has an inventory of 11,800 rooms with 2,500 rooms to be added. Upcoming hotel developments in Mandaue City include Bai Hotel, due for completion in 2018.

Orr said the residential sector is also positive, with the Duterte administration’s push on infrastructure development and the depreciating peso seen to increase the demand within the market.

Cebu currently has a supply of 25,000 residential units with a future supply of 12,000 units, with medium to high-end types seen to be very much in demand in the next few years.

Among the upcoming projects in Cebu are Avida in Gatewalk Central and the Mandani Bay Suites, both of which are scheduled for completion by year 2020.

Orr said the industrial sector is also growing with the continued influx of foreign direct investments as well as the growth of manufacturing.

TAGS: booster, economic, Infra, investments, Mandaue’s