Cebu industrial market to slow down this year

CEBU, Philippines - Cebu’s industrial market is expected to remain relatively inactive this year due to the global economic slump.

An outlook report on Cebu industrial market, released by international consulting and property management firm CBRE Richard Ellis stated that the global crisis, coupled with the slowdown in the local economy will be the main contributors to the slow-paced growth of the industrial sector in Cebu.

The report said that local experts believe that the effects of the global economic crisis will be strongly felt by the second quarter this year.

Cebu’s industrial market is however, more than prepared to meet the requirements should the demand arise.

There’ll be no active construction of new buildings but the existing industrial parks in Metro Cebu, or in the province, have adequate facilities and are very much capable of providing the industrial space requirements for potential locators.

 The upcoming infrastructure improvements in terms of transportation and power will make the industrial parks in Cebu even more attractive.

Likewise, the availability of skilled and qualified labor here will also be one of the major selling points to potential investors.

Based on the report, the prospect of attracting locators into the country will be further enhanced by the greater economic and social stability of the Philippines compared to its neighboring countries in the region.

“This will give them a stronger assurance, security and greater value and potential returns on their investments. Some industrial locators have pulled out from our neighbors such as Vietnam and Indonesia and may consider relocating their activities to the Philippines, with Metro Cebu as one of their options,” the report said.

The lease rates in Cebu are seen to remain at their present levels with a possibility of decreasing to accommodate the diminished resources of locators should the economy worsens.

 Also, building vacancy is seen to remain stable with a possibility of increasing once displaced locators from the neighboring countries decide to locate in Cebu.

“Some locators are expected to have a better perspective of how to position themselves amidst the crisis in the coming months and may eventually decide to set up operations here,” the report added.

Metro Cebu can be considered as one of the top industrial locations in the Philippines with over a hundred locators spread among eight accredited PEZA (Philippine Economic Zone Authority) industrial parks.

Rental rates for industrial lots have remained unchanged from the past year, however, rental rates for standard factor building in Mactan Export Zone II have increased by 17 percent to 28 percent from last year.

“It’s not all gloom in the Metro Cebu industrial property market. The silver lining can be found in the more established industrial parks such as the MEZ I and II which have maintained a high occupancy rate even at the midst of the global economic crisis,” the report concluded.