Do your homework to compete, real estate firms told

PROPERTY firms should do their homework and study the Cebu market to remain competitive.

Jojo Salas, research director at Pinnacle Real Estate Consulting Services, Inc., gave this advice to property developers as he described Cebu’s property market to have reached its maturity and that the challenge for industry players would be how to stay competitive.

“You need to do your homework (and observe) due diligence. That’s why we will be pushing for valuation (as well as) research and consulting,” he said at the sidelines of Pinnacle’s regional office launch in Cebu City on Tuesday.

For Pinnacle, “due diligence” means knowing where to go and what kind of property to develop.

Salas said they have constantly advised their clients that the “you will build and they will come” mentality is no longer acceptable at present, unlike in the past when developers raked in huge amounts of profit.

He said developers need to be more deliberate in terms of planning and targeting their market, especially now that the industry has become more competitive in terms of pricing and product.

“Let’s say you build a condominium. You have a big market. But you made a mistake in the size of your units, which are three square meters bigger than average. Then you are more expensive than your competitors by P240,000 and that’s just one unit,” Salas explained.

He added that due to the presence of niche markets, secondary and tertiary players can now reach the scale of projects developed by the likes of Ayala Land, Filinvest, and Megaworld.

But depending on the sector, location, and who the developer is, he said there will always be opportunities at the end of the day.

In its property market overview as of November this year, Pinnacle saw robust performances in the office, residential, retail, and hotel markets, but placed greater confidence in Cebu’s industrial sector.

Salas said that the industrial zones in Metro Cebu, which is comprised of 13 towns and cities, were already filled up four years ago — well ahead of their counterparts in Luzon.

Economic zones

At present, Metro Cebu has 27 IT parks/centers; 7 manufacturing zones; 2 tourism economic zones; and 1 agro-industrial economic zone.

Out of the total area of economic zones estimated at 120 hectares, only less than three hectares of space are available for lease, reflecting an occupancy rate of 97.5 percent.

To address the limited available industrial space in Metro Cebu, an additional 50 hectares will be reclaimed for a light industrial park in Minglanilla town under a public-private partnership between the Philippine Reclamation Authority, the local government unit, and Cebu Landmasters.

The recently approved vertical socialized housing as well as the increase in price and loan ceiling for economy housing may further drive the boom in the residential sector, which saw a 148-percent growth in the number of condominium units in the last four years.

In terms of residential stock, the market now has approximately 22,284 condominium units while it only had about 9,026 in 2013. Furthermore, an average of 5,000 units will be delivered in the next couple of years.

On take up, the average is 5,000 units per year, which is to say that the projected increase may be comfortably absorbed by the market. Stable increase in prices also showed the sector’s soundness.

The average selling price in 2013 was around P84,000 per sq. m.; P90,000 per sq. m. in 2014; and in 2015, at P95,000 per sq. m. At present, the estimated average selling price is at P99,000 per sq. m., a growth of 18 percent from the 2013 level.

Second choice

Pinnacle president and managing director Michael Mabutol, for his part, said Cebu has always been the second choice after Manila for real estate development.

“We started going here in 2004 to 2005 and we have seen a lot of development in 10 years. Most of the activities happened in the last four to five years, driven by BPOs as catalyst. We also have to highlight tourism as one aspect that is driving the real estate industry of Cebu,” he said.

Mabutol said Pinnacle, which was only based in Makati, decided to set up a regional office in Cebu City because they don’t want to miss the action here.

“We’ve been doing transactions in the last 10 years nationwide and it would be easier for us logistically to have an office that will be covering both Visayas and Mindanao,” he said.

In the last 10 years, Pinnacle has sold over 1,500 properties worth about P3 billion through its brokerage across all sectors, including agricultural, commercial, residential, and industrial.vi