Monday, December 12, 2016

The rise of Metro Cebu real estate


Metropolitan Cebu or Metro Cebu is a distinct market in itself. Historically, the Cities of Cebu, Lapu-Lapu and Mandaue consist the core of Metro Cebu. In 2007, the Regional Development Council of Central Visayas, composed of all governors in Region VII, formed the Metropolitan Cebu Development Council to coordinate developments in the following cities and municipalities: Cebu, Mandaue, Lapu-Lapu, Talisay, Compostela, Liloan, Consolacion, Cordova,Minglanilla, Naga, Danao, Carcar and San Fernando.

 

In terms of cost of living and prices, this "Metro Cebu" market is comparative to Metro Manila. In terms of education and culture, Cebu highly influences the Visayas and Mindanao islands.


Pinnacle has been focusing its research in the cities of Cebu, Lapu-Lapu and Mandaue. These cities are the most active real estate markets, and they comprise the core and driver of Metro Cebu market, according to Pinnacle

 

METRO CEBU REAL ESTATE MARKET

The real estate market in Metro Cebu (or simply "Cebu Market") is affected by trends in 4 sectors: Office, Residential, Hotel, and Industrial markets. We focus on the office market:



The office market in Metro Cebu follows that of the national trend wherein the BPO industry drives most of the market. There are more than 120,000 employees in the BPO industry in Metro Cebu as of writing. This is 10% of all BPO employees in the Philippines. The country's BPO industry grew by 20% per year on average in the past decade. In five years time, industry experts expect a growth range of about 12% to 18%. Worldwide, the BPO industry is projected to grow a steady 6% in the coming years. 


Before the end of the year, the Metro Cebu office market will be around 900,000 square meters of Grade A office spaces. This is approximately 50% more than in the past 4 years, an average of 12% growth per year. In the years of 2009 to 2013, average growth was at 15%. The deceleration is taken as a sign of the maturing market. 


Vacancy in the Metro Cebu office market started out at a low 2.45% in 2013. Due to increasing stock however, vacancy increased steadily over the years, rising to 7.9% in 2014, 11.5% in 2015 and now 17% as of the 2016 study. Meanwhile, rents show that the market is absorbing the increasing office stock. The weighted average rent of a Grade A office in Metro Cebu is Php 550 per sqm per month. This is a substantial 21% more than the weighted average rent of Php 455 per sqm per month in 2013. In 2014, it was at P495 per sqm per month and then in 2015, P525 per sqm per month. 

 

Vacancy-wise, it started at a low of 2.45% in 2013. Due to the increasing stock, vacancy steadily increased as well. The estimated vacancy is 7.9% in 2014; 11.5% in 2015; and 17% atpresent. Nonetheless, rents would show that the market is absorbing the increasing office stock. The weighted average rent of Grade A office in Metro Cebu is Php 550 per sqm per month. This a substantial increase of 21% compared to the weighted average rentof Php 455 per sqm per month in 2013. The estimated weighed average rent in 2014 was Php 495 per sqm per month, and in 2015, it was Php 525 per sqm per month. 


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