Vibrant, better year seen

SM Seaside is one of the malls in Cebu City that has contributed at least 240,000 sq.m. of leasable space to Cebu’s stock of 1 million sq.m. of gross leasable area.

RETAIL, REAL ESTATE sectors

Last of three parts

With growth in tourism and the IT-BPM sectors comes the growth of the retail and real estate sectors.

Robert Go, Philippine Retailers Association (PRA) Cebu chapter president, said this as he sees another vibrant year for the industry.

According to Colliers International Philippines, Cebu remains a major retail hub outside of Metro Manila due to the proliferation of outsourcing companies; continued deployment of Filipino workers abroad whose monthly remittances fuel household spending; influx of local and foreign tourists; as well as sustained generation of employment opportunities in major economic sectors such as construction, manufacturing, and export processing.

Reaping fruits

“The year 2017 is relatively good for retailing because we are enjoying a GDP growth rate of 6.9 percent in the third quarter. Infrastructure projects are coming in, overseas Filipino workers are going out and sending money, and we are reaping the fruits of the BPO sector,” Go said.

He emphasized that because of developments in these sectors, Filipinos, particularly the middle-income class, have a lot of money to spend.

This has led developers to not only open more malls in the urban areas, but in the countryside as well.

“The year 2016 was good because of election spending. Even without elections, 2017 still grew and that makes it relatively better than the last,” he said.

Retail sales were projected to grow by 5.4 percent in 2017.

Overall, Colliers observed that despite the substantial increase in retail stock following the entry of national developers in Cebu, overall vacancy remains low as the additional supply is offset by a continuously expanding local economy which effectively boosts Cebuanos’ disposable incomes.

The research firm added that Metro Cebu’s dynamism as a major retail hub will be sustained by continued economic growth.

Data from the National Economic and Development Authority (NEDA) show that Central Visayas’ gross regional domestic product (GRDP) per capita or the proxy for individual income grew by an average of 5.5 percent per annum in the last six years.

“This robust macroeconomic environment effectively boosts Cebu households’ propensity to consume,” Colliers had said.

Gross leasable area

At present, Cebu’s total stock has already reached over one million square meters of gross leasable area, the biggest contributor being SM with about 40 percent of total retail stock.

SM City Seaside at the South Road Properties (SRP) alone has over 240,000 sq.m. of leasable space, followed by Ayala Land with over 160,000 sq.m. of leasable space.

The three-year pipeline for Cebu also looks robust with close to 200,000 sq.m. of new retail space due to be developed, mostly within the townships of SM, Ayala, Aboitiz Land, and Filinvest.

With more malls opening, Go pointed out that older stores need to undergo facelifts if they want to keep their markets.

“Old stores will need a facelift every five years. If you have a shabby establishment, nobody will get inside it, especially millennials who are not brand or name conscious. They look at what is physical or visual,” he said.

Go also projects increased presence of traditional retailers online due to the growth of electronic commerce (e-commerce) in the country.

However, while he welcomed this innovation, he said problems in internet infrastructure will delay the expansion of e-commerce in the Philippines.

Real estate: Loud year

For Anthony Leuterio, owner of Leuterio Realty and Brokerage, 2018 will be the “loudest” year ever for real estate.

He said developers have learned their fair share of lessons in the last four years and have now become more market-conscious.

“New and upcoming developers have been watching in the last two years existing players and are now developing the same type of projects where they have vast land holdings,” he said.

Leuterio added that the biggest winners in 2018 will be those who have been land banking in the last five years.

He said exciting new projects can be expected next year until 2019, with more real estate innovations to be incorporated in these ventures for developers to maximize profits and build faster.

Emerging markets, he said, are now the main target of big developers, which include Dumaguete, Bacolod, Bohol, Butuan, Cagayan de Oro, Davao, and General Santos.

More condo projects

Leuterio said that in Cebu, expect more condominium projects than subdivision projects to pop up in 2018 and 2019, particularly in Minglanilla, Talisay, Naga, Carcar, Consolacion, and Liloan.

He expressed confidence that the second wave of the property boom will happen in 2018, the first one occurring over a decade ago.

“I know 2018 will be the biggest year for real estate. It’s three to five times bigger than 2017,” said Leuterio.

LTS applications

If the number of license to sell (LTS) applications received by the Housing and Land Use Regulatory Board in Central Visayas (HLURB-CRV) in 2017 is any indication, the region’s property sector looks to have been vibrant this year and will continue to be in 2018.

The HLURB-CRV received more LTS applications this year compared to 2016 amid a growing demand for real estate in the region, particularly for economic residential housing units.

“We are positive this trend will continue onward to 2018. We are seeing an increase in the number of applications for LTS every year,” Engineer Francis Ordineza, HLURB-CRV director, said in an interview.

162 applications

As of Dec. 5, 2017, the HLURB has recorded 162 LTS applications, up by 78.02 percent from 91 posted for the whole year 2016.

The LTS is a certification obtained by a property developer from the HLURB as mandated in Section 5 of the Presidential Decree No. 957, serving as proof that the developer runs a legitimate business and is financially capable to finish the project they are selling.

Among the applications lodged before the HLURB-CRV, 113 were for condominium projects, 48 were for subdivision developments, and two memorial parks.

Out of the 162 applications, however, the agency has only so far approved 60 — 38 of which are subdivision projects, 20 condominiums, and the two memorial parks.

The 60 projects were valued at P23.9 billion, only slightly higher than the P23.8 billion recorded in 2016.

In its Top 10 predictions for 2018, Colliers said leisure and industrial activities will fuel Cebu’s property expansion.

Colliers stated that the completion of the MCIA expansion project should further boost the island province’s attractiveness as a tourist destination.

Cebu’s rising attractiveness as a tourist spot and growing competitiveness as an investment destination should support a 15- to 20-percent growth in tourist arrivals over the next 12 months.

This should sustain hotel occupancy of between 65 and 70 percent across Metro Cebu over the same period, Colliers added.

More investments

Meanwhile, the Cebu Provincial Investment and Promotions Office (CIPO) is expecting more foreign investors to relocate in Cebu amid robust economic activities.

According to CIPO Head Roy Soledad, they have received several inquiries from countries such as the US, France, China, Korea, Switzerland, Malaysia, Indonesia, Brunei Darussalam, and the United Arab Emirates, which he all hopes would push through with their investments.

“Around 11 companies are looking to expand in Cebu wanted more information. Around one-third of that will push through with investing here if we will be able to identify a suitable location,” Soledad said.

By 2018, Soledad said the provincial government hopes to study the feasibility of building an alternate airport in the northern part of the island which would spur economic growth in the area.

He also mentioned the possibility of launching a study on putting up several economic zones in Cebu.

“We have seen greater participation from the local government units as they have realized the importance of being more aggressive in looking for investors,” said Soledad.

The Board of Investments (BOI) Cebu extension office logged two big-ticket projects in 2017, boosting the value of registered projects with the office to P20 million during the covered period.

These include the P5.9-million solar power venture by Solar Power Philippines Commercial Rooftop Projects in Medellin, northern Cebu and the P12.5-million investment of South Western Cement Corporation in Malabuyoc, southern Cebu.

Soledad said that by next year, they want to start working on turning Cebu into the investment hub of the south through intensified investment generation and facilitation.

He added that they will also establish more ties with local micro, small, and medium enterprises (MSMEs) in terms of promoting their products.