BPO, tourism to continue to spur real estate growth
The real estate sector is banking on the robust growth of the business processing outsourcing and the tourism industries to continue to spur more demand this year for commercial, office and residential projects.
Both these industries have fueled the growth of Cebu’s economy including the real estate industry last year and is expected to continue to be a driver of Cebu’s economic growth this year.
“Cebu’s real estate industry growth continued in an upward trajectory as is evident in the number of construction projects in the city, particularly within the Cebu Business Park and Cebu I.T. Park — collectively called the Cebu Park District,” said Francis O. Monera, president and chief executive officer of Ayala Group – Cebu Holdings, Inc.
“Construction activities around the city have become more dynamic at present with more developments in the pipeline that continue to diversify from horizontal to vertical projects,” said Monera.
“This reflects the increasing number of condominium units which is expected to grow by 74 percent to over 5,000 units completed in 2011, together with an expanding office space that may reach to some 460,000 square meters of usable area or 15 percent more than in 2010 in Cebu,” said Monera.
This development has also opened more jobs for Cebuanos.
Monera said that the Cebu Park District had almost 50,000 workers coming from the IT/BPO locators.
He said he expected a 90 percent increase in the workforce this year.
And he said that plans were underway for the Ayala Group to start construction on BPO building within Cebu Business Park, as well as the 3rd sequel to the eBloc Tower within Cebu I.T. Park.
“The increasing economic activity within the city will also fuel demand for more residential units. Alveo Land’s Solinea will initially bring in 591 units for the first towers. With the success of 1016 Residences, Ayala Land Premier is set to launch yet another residential condominium within Cebu Business Park. The third and best-selling residential brand, Avida, also plans to launch a third tower by next year,” said Monera.
Jose Soberano, president of Cebu Landmasters, Inc., agrees with Monera.
He said that from a local developer’s point of view, the industry did pretty well last year with more projects introduced and evidently productive sales results for both residential and office units, house and lot packages as well as subdivision lots catering to the mid and higher end of the market.
“BPO buildings and spaces this year have experienced occupancy and rental rates on the rise. Hotel occupancy rates have even inched upward in spite of more budget, business, chain, and resort hotels that came in,” said Soberano.
“On the retail side, we must have noticed the expansion of mall spaces, supermarkets, department stores, restaurants, etc. in terms of numbers and actual leasable and operating floor areas. These are definitely signs of robust times in the industry,” he said.
With this development, Soberano expects the middle-end market to expand more robustly in 2012 with more projects to be launched and offered to the market from P1.5 million to P3 million price ranges.
Soberano added that both horizontal and vertical projects will grow this year with people now wanting to invest in subdivisions and condominium type of communities.
A National Economic Development Authority (NEDA) Central Visayas Regional Economic report showed that the continued growth of the construction and real estate sectors last year were due to strong demand for BPO (business process outsourcing) and tourism related facilities and services, growing demand for residential units particularly in the urban centers in Cebu,and demand for services required by the MICE (meetings,incentives, conventions and exhibitions) market.
Monera said Cebu’s BPO sector had remained upbeat with the expansions of existing companies and the entrance of more call center and IT firms interested in the locating in the city.
He said that they projected an average annual rate of growth of 20 percent for the BPO industry, which had continued to be a source of employment and investments in Cebu.
In the Cebu Park District alone, the construction activity continued to be bullish to accommodate the continuing demand for office space.
At present, there are six buildings under construction in the Cebu Business Park and eight buildings in the Cebu I.T. Park.
“Within Cebu, expanding office space for the year was expected to reach to some 460,000 square meters of usable area or 15 percent more than in 2010,” Monera said.
Tourism also remains a key growth driver in Cebu with more than 30 established hotels offering 6,000 rooms varying from first class to the economy type units.
Government data shows that Cebu ranked as the third most visited destination last year with around 1.77 million domestic and international visitors or a 9.7% increase over the same period in 2009.
In the past few years, the entry of foreign tourists, businessmen, balikbayans and local travelers has led hotels and resorts to offer a variety of accommodations. These include boutique and businessmen’s hotels, leisure-oriented resorts, five-star luxury hotels & casinos to traveller’s inns.
Soberano also attributed the interest rate scenario and the soundness of our banking system to have contributed to the growth and demand from consumers in the industry.
To help sustain the growth of the BPO, tourism and real estate sectors, Monera said that the stakeholders in the private sector, local government units and the academe must continue to work together to increase the qualified manpower pool needed to man these industries.
He said having a ready qualified manpower pool would in effect would bring in more investments to Cebu.
Soberano, for his part, said government should also start addressing the issue on high utility rates from electric power and water in Cebu.
He also saw the need for a coherent mass transport system that could bring the workers and customers faster to their workplace or the market and back to their homes.
