Real estate sector fastest growing industry in Cebu
The real estate industry of Cebu was last year’s fastest growing sector.
The industry saw a revenue growth rate of 18.8 percent in the third quarter of 2012, making it the fastest growing of all industries, said Francis O. Monera, Cebu Holdings, Inc.president.
Cebu Holdings, Inc. is an affiliate of Ayala Corporation engaged in real property development, ownership and management. Their projects include the Cebu Park Districts – Cebu IT Park and Cebu Business Park which hosts other residential and commercial properties they developed in partnership with other Ayala subsidiaries like Ayala Land Premier, Alveo Land Corp., and Avida Land Corp.
Jose R. Soberano III, Chamber of Real Estate and Builders Association, Inc., agreed.
“The real estate industry is experiencing unprecedented growth this year (2012) in terms of new projects being launched and completed ; increasing booked sales take-up and rental income attributable both in sheer volume and upward price movements,” said Soberano, who is also the former president and owner of Cebu Landmasters, Inc.
new firms dominate
According to Primary Homes, Inc. vice president for sales and marketing Ramero Espina, the real estate industry of Cebu is dominated by local players both old and new which have started to diversify their business to include real estate development.
“We see a lot of new companies created starting in 2011 when local businessmen owning properties now investing in real estate projects and developing their properties into different residential, commercial or mix-use projects to ride the upward trend,” said Espina.
These included Grand Land, Inc., the developer arm of the Gaisano Grand Group of Companies; GoldPeach Properties the developer arm of the Gaisano Capital Group; Apple One Properties, a company managed by a group of Cebu-based construction companies with sister companies Diamond Suites and Apple Tree Suites Cebu; and Worldwide Central Properties, the developer arm of Worldwide Home Depot and Worldwide Steel Group.
These new companies are now starting to launch mostly residential projects both condominium and house and lot properties to the Cebuano market.
As of November last year, Grand Land, Inc. president Ryan Bernard Go announced four new projects under their brand which will add about 1,771 residential units for Cebu – 1,482 condominium units in their six-tower resort-type project in Mabolo and a total of 289 house and lot units under their City Homes brand which will be located in Mactan, Minglanilla and Mandaue City.
GoldPeach Properties also launched their second flagship project last year called City Soho which stands for Small Office, Home Office concept along B. Rodriguez Street, Cebu City. The project will add 225 commercial units and 233 residential units.
Following the success of their first mixed-use project in Cebu Business Park, Apple One Properties executive vice president Yvet Andalis, said the company would invest P2 billion for a 2.8 hectare property in Banawa, Cebu City that will have a total of 1,311 residential units.
New entrant to the industry Worldwide Central Properties will start developing their flagship project by second quarter of this year called Sundance Residences located in Banawa, Cebu City. The project will add at least 208 condominium units for the first of two towers scheduled to be completed by 2015.
Major companies from Manila have also started developing in Cebu.
In June of last year, Megaworld Corporation officially launched their first 16.2 hectares township project in Cebu called Mactan Newtown Center which investment was estimated to reach at least P10 billion.
The property would include luxury residential condominiums, a cyberpark of modern BPO offices, a boutique hotel, and retail and entertainment centers, said , Noli D. Hernandez, first vice president for sales and marketing of Megaworld Corp.
Megaworld is known for its major developments like McKinley Hill in Fort Bonifacio, Taguig City and Eastwood City in Libis, Quezon City.
According to Monera, the major growth drivers of the real estate industry in the country continue to be the funds sent home by overseas Filipino workers, and the booming business process outsourcing (BPO) industry the has expanded robustly last year.
“In the residential front, strong and steady influx of remittances, complemented by a healthy investing environment and low interest rates have encouraged more and more Filipinos to buy property,” said Monera.
He also attributed the country’s position as the top call center provider in the world and second in non-voice operations fueling the BPO sector’s growth, which in turn spurred the growth of other industries.
“CBRE Philippines highlights multiple credit rating upgrades, the support of the government and a positive economic outlook as encouraging international businesses to expand and relocate in the country,” said Monera.
CBRE Philippines is the country’s largest commercial real estate advisory firm which is part of the global CBRE Group, Inc.
Soberano also cited the high liquidity in the market which allowed for more available funds as one factor that helped accelerate the growth of the industry.
He also cited the Central Bank’s actions in helping shield the economy from the global crisis.
The Central Bank’s decision to slash interest rates to record lows to entice local consumer spending and investments had helped shield the Philippine economy from the crisis crippling bigger economies in other parts of the globe, said Monera.
Monera said construction expenditures from both private and public projects also buoyed the real estate industry.
The improvements in the country’s rating by independent bodies has also projected a positive image to the country which then created more interest from investors.
Soberano said this positivity raised the business confidence of local players.
Both Soberano and Monera said they expected the industry to grow faster this year.
“With the Philippines seen as one of the most cost-effective outsourcing destinations in Asia, providing a conducive environment for foreign investors and an excellent pool of skilled labor, the BPO sector will continue to be one of the major drivers of the industry,” said Monera.
Soberano agreed but cited the challenges that the sector would face.
“Real estate pricing will be a major challenge for developers to tackle due to competition reaching fever pitch proportions and the entry of big industry players in the local provincial market,” said Soberano.
He said he believed that more investors would enter the market and focus on the housing backlog in the middle and low income market.
Monera also warned that the approval of a PEZA Board resolution amending incentives for certain IT economic zones would be detrimental to Cebu’s potential as an IT hub.
“While we laud its intent to disperse development in other areas in the country, it is significant to note that Cebu only has a 10 percent market share of IT and ITES locators vis-à-vis Manila’s 80 percent. This comparison alone shows that Cebu has yet to develop its full potential in this industry,” he said.
The implementation of the resolution would raise the cost of doing business in Cebu and turn-off potential investors or those looking at expanding their current operations, said Monera.
“Our view is that this new policy will adversely affect the growth of the local IT industry which has only just started to take off in last couple of years.”
The government should create a business-conducive and enabling environment for the industry through consistent and supportive government policies, and enhance infrastructure through public and private collaboration to encourage more investments, said Monera.
Soberano said more infrastructure push from government especially major projects that would solidly support the tourism industry like projects making the international airports to world-class standards.