Cebu property sector nears pre-pandemic levels

CEBU, Philippines — Cebu’s real estate sector is witnessing a comeback to pre-pandemic levels with the office market’s performance demonstrating sustained demand in the first half of 2023 and the residential market reaching a 90 percent overall absorption.

According to Santos Knight Frank, a real estate services company, Metro Cebu’s office occupancy improved from 77 percent in the second half of 2022 to 80 percent in the first half of this year, while weighted average lease rates increased from P614 to P641 in the same comparative period. These indicate sustained demand by occupiers who are either expanding or returning to the office.

These rosy signals come on the heels of significant improvements in infrastructure, such as the recent opening of the 8.9-kilometer Cebu-Cordova Link Expressway.

Santos Knight Frank chairman and chief executive officer (CEO) Rick Santos believes that the infrastructure developments in Cebu are driving the rise of new business hubs, such as the Cebu South Road Properties and the North Reclamation Area. At least 87,700 sqm of aggregate new office supply are in the construction pipeline in these two areas.

“Cebu is coming out of the pandemic with a great promise of long-term sustained growth. Emerging hubs, such as the Cebu South Road Properties and the North Reclamation Area, are offering new opportunities for real estate expansion and will drive economic activities in Metro Cebu,” he said in his recent visit to Cebu.

In 2022, the Central Visayas Region’s GDP grew by 7.6 percent at par with the national growth rate. This was a result of the rebound of local tourism, resumed business activities, outsourcing growth, and booming infrastructure.

Ankur Maheshwari, the company’s senior associate director for occupier and solutions, affirmed that Cebu remains a preferred location for occupiers coming into the Visayas region, with several locators basing their Philippine operations in Cebu.

“In fact, Cebu stays competitive when compared with Bangalore, one of India’s most popular office markets for IT-BPM companies,” noted Maheshwari.

One of the reasons cities like Cebu attract employee-intensive occupiers is because of the total effective cost of real estate, Maheshwari added explaining that multinational occupiers rationalizing their Western operations, “this becomes an important advantage for Cebu.”

Santos Knight Frank reveals that Cebu offers more value for money owing to a better net usable area ratio (~85-90 percent vs ~70-75 percent in India). This, combined with newer and more energy-efficient LEED-certified buildings, translates into not just lower overall cost but also better efficiencies and experience.

Santos Knight Frank is the first and largest fully integrated real estate services company in the Philippines. Founded by Santos in 1994, he has grown the business to 11 market-leading service lines and over 1,400 professionals across the country.

It is responsible for more than 4 million sqm of office space transactions, including the largest office leasing deal in Philippine real estate history, and today manages 20 million sqm of property.

The company is part of the Knight Frank global network.

Founded in 1896, Knight Frank LLP is the leading independent global property consultancy.

Headquartered in London, Knight Frank has more than 20,000 people operating from 487 offices across 53 territories. The Group advises clients ranging from individual owners and buyers to major developers, investors and corporate tenants. — (FREEMAN)