In 2013; rates, new players boosted real estate growth

CEBU, Philippines - Cebu’s real estate industry made a significant performance in 2013, boosted by low interest rates and the entrance of more new players.

“The year 2013 was a good real estate year, sales increased more than 60 to 70 percent and a lot of new players came in, and rental went up in the last quarter this year” said Philippine Allied Chamber of Real Estate Brokers and Licensed Salesmen (PhilAcre Inc.) President Anthony Leuterio.

Likewise, one of Cebu’s largest developers, Cebu Holdings Inc., (CHI) regarded the year 2013 as livelier year, although the second half was filled with challenges brought about by natural calamities, such as the earthquake and typhoon. But, overall, 2013 will still end up stronger than last year in terms of market take up, said CHI President Francis O. Monera.

OFW remittances for the month of October reached US$2.3 billion, an all-time high, while the BPO sector is poised to contribute US$16 billion in revenues for full-year 2013.

These two industries are the primary reasons why our country enjoys a current account surplus and are crucial underpinnings of the robust domestic consumption that our country experiences, said Monera.

Employment generated by the BPO industry and the influx of remittances have increased purchasing power of the middle class, which has in turn sustained the demand residential units, whether they be for subdivisions, townhouses, and condominiums. With higher disposable income circulating in the local economy, strong consumer spending has also benefited the retail sector.

Continued growth in the local property sector is evident even just within the Cebu Business Park and Cebu I.T. Park, which host the majority of office and residential high-rise developments in the city. As of the end of the year, there are currently 14 ongoing construction projects in Cebu Business Park and five constructions in Cebu I.T. Park for residential, office and commercial purposes. Once completed, these projects will bring in a total gross floor area of 434,800 square meters and 94,400 square meters respectively.

“For CHI and the Ayala products in Cebu, our data shows that the second quarter had the strongest take-up for residential projects this year. Office and commercial leasing remains robust with high occupancy rates among our various projects throughout the year. In fact, this year, we are nearing completion of eBloc Tower 3, and started construction on two more BPO buildings – the ACC Corporate Center and the eBloc Tower 4. We foresee continuing demand with more office projects in the pipeline,” said Monera.

In quarter 2 of 2013, there were several successful launches of residential projects in Cebu among various developers. That quarter saw very strong performance of Ayala Land’s projects, namely Avida Towers Riala, Alveo’s Solinea Towers, and Ayala Land Premier’s Park Point Residences.

Part of what triggered the growth is the credit rating achievements which have increased investment interests in the Philippines, as well as a stable political climate under the current administration. With a better credit standing, key interest rates were low, offering good debt financing opportunities for real estate. These have also increased investor confidence, encouraging increased foreign direct investments, especially in the BPO sector.

The healthy economy, growing consumer spending, and a sustained remittances also made the local market for attractive to more international retailers, and thus buoyed the retail property sector.

Although the market has become very dynamic, competition in the real estate market provided a more tensed environment for developers, and property sellers.

“Competition was very strong in 2013 with a lot of new residential projects and sequels to existing developments being launched. We expect competition to get even heavier with the news of more players making their regional expansions in Cebu,” said Monera.

In the office leasing front, more investors are also taking advantage of the robust BPO sector. Cebu Park District, comprised of Cebu Business Park and Cebu I.T. Park, saw continued growth in 2013.

These parks which are integrated, large-scale, mixed-use developments, host the largest concentration of Cebu’s BPO industry. Cebu I.T. Park, which was the first PEZA-accredited I.T. park outside Luzon, currently has two office building constructions. With the certification of Cebu Business Park as a PEZA-accredited IT zone in 2010, lot owners and investors have also started building on their properties. There are currently eight BPO buildings being constructed within the business park. /JOB (FREEMAN)